CHAPTER I GENERAL PROVISIONS
The purpose of this Act is to prevent double taxation and tax avoidance and to facilitate cooperation in tax affairs among countries by prescribing matters regard adjustment of tax on international transactions, international cooperation in tax administration, reports on foreign assets and submission of related data, and imposition of GloBE tax. <Amended on Dec. 31, 2022>
| (1) | The definitions of terms used in this Act shall be as follows: <Amended on Oct. 1, 2025> |
| 1. | The term "international transaction" means a transaction in which either or both of the parties are nonresidents or foreign corporations (excluding a domestic place of business of a nonresident or foreign corporation), including trading or leasing tangible or intangible assets, providing services, lending or borrowing money, and all other transactions involving profits or losses and property of the parties; |
| 2. | The term "domestic place of business" means the following: |
| a. | A domestic place of business of a nonresident under Article 120 of the Income Tax Act; |
| b. | A domestic place of business of a foreign corporation under Article 94 of the Corporate Tax Act; |
| 3. | The term "special relationship" means any of the following relationships, for which the detailed criteria shall be prescribed by Presidential Decree: |
| a. | A relationship between the parties to a transaction where either party to a transaction owns directly or indirectly at least 50 percent of the voting stocks (including the equity shares; hereinafter the same shall apply) of the other party; |
| b. | A relationship between the parties to a transaction where a third party or a person prescribed by Presidential Decree including his or her relatives owns directly or indirectly at least 50 percent of voting stocks of both parties; |
| c. | A relationship between the parties to a transaction where both parties have a common interest in the adjustment of income depending on the equity investment relationship, transaction relations of goods and services, monetary lending relationship, etc. and either party to the transaction has the power to substantially determine the business policy of the other party; |
| d. | A relationship between the parties to a transaction where both parties have a common interest in the adjustment of income depending on the equity investment relationship, transaction relations of goods and services, monetary lending relationship, etc. and a third party has the power to substantially determine the business policies of both parties; |
| 4. | The term "foreign related party" means a nonresident or foreign corporation (excluding a domestic place of business of a nonresident or foreign corporation) in a special relationship with a resident, domestic corporation, or domestic place of business; |
| 5. | The term "arm’s length price" means a price that is applied or deemed to be applied by a resident, domestic corporation, or domestic place of business in an ordinary transaction with a person other than a foreign related party; |
| 6. | The term "tax authority" means the head of a tax office having jurisdiction over the place for tax payment or the commissioner of a regional tax office; |
| 7. | The term "tax treaty" means any type of international agreement governed by international law, such as treaties, conventions, agreements, or notes which the Republic of Korea enters into with another State (including a region to which unique tax laws apply) with respect to taxation on income, capital, and property or cooperation in tax administration; |
| 8. | The term "Contracting State" means any country that enters into a tax treaty with the Republic of Korea; |
| 9. | The term "competent authority" means the following persons: |
| a. | For the Republic of Korea: The Minister of Finance and Economy or any person delegated with his or her authority; |
| b. | For a Contracting State: A person designated as the competent authority in a tax treaty; |
| 10. | The term "mutual agreement procedure" means a procedure by which application and interpretation of tax treaties, unreasonable taxation, or adjustment of taxable income is resolved through consultations between the competent authority of the Republic of Korea and that of the other Contracting State. |
| (2) | Except as otherwise provided in paragraph (1) and other provisions of this Act, any term has the same meaning as the terms defined in Article 2(1) of the Restriction of Special Taxation Act and those under statutes specified in Article 3(1)1 through 12, 18, and 19 of that Act. |
| Article 3 (Substance over form principle regarding international transactions) |
| (1) | In an international transaction, if any ownership of the taxable income, earnings, property, act, or transaction is just nominal and there is another person to whom such income, etc., belongs, the other person shall be liable to pay taxes and governed by tax treaties. |
| (2) | In an international transaction, tax treaties shall apply to the provisions regarding the computation of tax base according to the substance of a transaction, regardless of the name or form of the taxable income, earnings, property, act, or transaction. |
| (3) | In an international transaction, if deemed that both parties have conducted such transaction either indirectly through a third party or via at least two acts or transactions (hereafter in this Article referred to as "roundabout transaction") to benefit wrongfully from this Act and tax treaties, this Act and tax treaties shall apply according to the economic substance of the transaction, assuming that such transaction has been conducted directly by both parties or such acts or transactions are a single continuous act or transaction. |
| (4) | Where the tax burden to be paid to the Republic of Korea is significantly reduced by more than the ratio prescribed by Presidential Decree through a roundabout transaction (excluding where the amount of the relevant roundabout transaction, the reduced amount of the tax burden to be paid to the Republic of Korea, and other relevant factor meet the requirements prescribed by Presidential Decree), paragraph (3) shall apply on the presumption that such transaction is made to benefit wrongfully from this Act and tax treaties unless it is verified that the taxpayer has no intention of avoiding taxes, such as the fact that the relevant roundabout transaction has a legitimate business objective. |
| (5) | For the purposes of paragraph (4), the calculation of the tax burden to be paid to the Republic of Korea and other necessary matters shall be prescribed by Presidential Decree. |
| Article 4 (Relationship to other statutes) |
| (1) | This Act shall take precedence over other statues providing for national taxes and local taxes. |
| (2) | Article 41 of the Income Tax Act and Article 52 of the Corporate Tax Act shall not apply to any international transactions; provided, this shall not apply to the donation, etc. of assets prescribed by Presidential Decree. |
| Article 5 (Relationship between tax laws and tax treaties) |
Terms and phrases not defined in tax treaties shall be interpreted and applied as defined or used in the tax laws specified in subparagraph 2 of Article 2 of the Framework Act on National Taxes.
CHAPTER II ADJUSTMENT OF TAX ON INTERNATIONAL TRANSACTIONS
SECTION 1 Adjustment of Taxation on Transactions with Foreign Related Parties
Subsection 1 Adjustment of Taxation by arm’s length Price
| Article 6 (Reporting and rectification claim by arm’s length price) |
| (1) | If the transaction price is lower or higher than the arm's length price in international transactions with a foreign related party, a resident (including a domestic corporation and a domestic place of business; hereafter the same shall apply in this Section) may pay file a return on the tax base and tax amount adjusted based on the arm's length price, or file a request for rectification, with the head of the competent tax office having jurisdiction over the place of tax payment, by the deadline specified in any of the following subparagraphs: <Amended on Dec. 21. 2021; Dec. 31, 2024> |
| 1. | The tax return deadline under Article 70, 70-2, 71, 73, or 74 of the Income Tax Act or Article 60(1) or 76-17(1) of the Corporate Tax Act; |
| 2. | The deadline for filing a revised tax return under Article 45 of the Framework Act on National Taxes; |
| 3. | The deadline for filing a request for rectification under Article 45-2(1) of the Framework Act on National Taxes; |
| 4. | The deadline for filing a return after the deadline under Article 45-3(1) of the Framework Act on National Taxes. |
| (2) | When filing a tax return or a request for rectification in accordance with the arm's length price under paragraph (1), the following documents shall be submitted: <Added on Dec. 31, 2024; Oct. 1, 2025; Dec. 23, 2025> |
| 1. | Where a tax return is filed on the tax base and tax amount adjusted based on the arm's length price: A report on adjustment of transaction price in the form prescribed by Decree of the Ministry of Finance and Economy; |
| 2. | Where a request is filed for the rectification of tax base and tax amount adjusted based on the arm's length price: The following documents: |
| a. | A report on the adjustment of transaction price under subparagraph 1; |
| b. | Documents proving the method of calculating the arm's length price, prescribed by Decree of the Ministry of Finance and Economy; |
| c. | Documents proving the adjustment of taxable income of a foreign related party as prescribed by Decree of the Ministry of Finance and Economy. |
| (3) | Upon receipt of a request for rectification under paragraph (1), the head of the competent tax office having jurisdiction over the place for tax payment may request the applicant to supplement the documents submitted under paragraph (2)2 within a specified period not exceeding 30 days, if any omission or incompleteness is found. In such cases, the period required for supplementation shall not be included in the period under paragraph (5). <Added on Dec. 31, 2024> |
| (4) | When the head of the competent tax office having jurisdiction over the place of tax payment requests supplementation under the former part of paragraph (3), he or she shall notify the resident of his or her intention that, if the resident upon receipt of request for supplementation fails to submit the supplementary documents within the period specified in the former part of that paragraph without good cause, he or she may not make a rectification. <Added on Dec. 31, 2024> |
| (5) | Upon receipt of a request for rectification under paragraph (1), the head of competent tax office having jurisdiction over the place of tax payment shall rectify the tax base and tax amount, or notify the person who made the request that there is no ground to rectify the tax base and tax amount, within 6 months from the date of receipt of the request for rectification. <Added on Dec. 31, 2024> |
| Article 7 (Determination and rectification by arm’s length price) |
| (1) | Where the transaction price is lower or higher than the arm's length price in an international transaction between a resident and a foreign related party, the tax authority may determine or correct the tax base and tax amount of the resident based on the arm's length price. |
| (2) | For the purposes of applying paragraph (1), where a tax authority computes an arm's length price for at least two taxable years by applying the same arm’s length pricing method among the methods prescribed in Article 8 and determines or rectifies the tax base and tax amount for some taxable years on the basis of the arm's length price, the tax authority shall also determine or rectify the tax base and tax amount on the basis of such arm's length price for the remaining taxable years. |
| (3) | Paragraphs (1) and (2) shall not apply where a taxpayer clearly proves that he or she is not in any of the special relationships provided in Article 2(1)3c or d. |
| Article 8 (Arm’s length pricing method) |
| (1) | The arm’s length price shall be calculated by the most reasonable method among the following methods, in consideration of the terms and conditions of transaction, such as the characteristics and functions of goods or services and the economic environment, which are applied or deemed to be applied in an ordinary transaction with a person other than a foreign related party; provided, the method provided in subparagraph 6 shall apply only where the arm’s length price may not be computed by the methods provided in subparagraphs 1 through 5: |
| 1. | Comparable uncontrolled price method: A method of regarding the transfer price between the independent, unrelated parties as the arm’s length price in a transaction similar to an international transaction between a resident and a foreign related party; |
| 2. | Resale price method: In cases where a purchaser who is one party in an international transaction between a resident and a foreign related party makes resale to any unrelated person, a method of regarding the amount computed by deducting the amount viewable as arm’s length profits of the purchaser from the resale price, as the arm’s length price; |
| 3. | Cost plus method: In cases where one party in an international transaction between a resident and a foreign related party produces or sells assets or provides services, a method of regarding the price computed by adding the amount viewable as arm's length profits of the seller of assets or the service provider to the cost incurred in the course of production or sale of the assets or provision of the services, as the arm's length price; |
| 4. | Transactional net margin method: A method of regarding a transfer price calculated on the basis of an ordinary transactional net profit ratio realized in a transaction between a resident and an unrelated person among transactions similar to international transactions between a resident and a foreign related party, as the arm's length price; |
| 5. | Profit split method: A method of sharing a net trade profit created by both parties in an international transaction between a resident and a foreign related party, in proportion to each party's relative contribution which has been measured by reasonable allocation standards; and regarding the transfer price calculated on the basis of such shared profit as the arm's length price; |
| 6. | Other methods deemed reasonable as prescribed by Presidential Decree. |
| (2) | For the purposes of applying paragraph (1), the tax authority shall clearly grasp the substantial content of the relevant international transaction, considering commercial or financial relations between the resident and the foreign related party and the important transactional terms and conditions in such international transaction, and shall decide on whether such international transaction is commercially rational in comparison with transactions between independent, unrelated parties in circumstances involving transactions similar to the aforesaid international transaction. |
| (3) | Where a decision made pursuant to paragraph (2) finds that the international transaction between the resident and the foreign related party is not commercially rational and that it is significantly difficult to compute an arm’s length price based on such international transaction, the tax authority may, based on the economic substance of that transaction, consider such transaction as if it had not occurred, or apply paragraph (1) by re-characterizing it as a new transaction in a rational manner. |
| (4) | Detailed matters regarding the arm’s length pricing method provided in paragraphs (1) through (3) shall be prescribed by Presidential Decree. |
| Article 9 (Determination and rectification by arm’s length cost sharing) |
| (1) | Where a resident and a foreign related party conclude an agreement on the sharing of costs, expenses, and risks (hereafter in this Article referred to as "costs, etc.") in advance and thereunder jointly develop or secure an intangible asset (hereafter in this Article referred to as "joint development"), the tax authority may determine or rectify the tax base and tax amount of the resident based on the arm’s length share of costs, if the amount of the costs, etc. allotted to the resident is less or more than the arm’s length share of costs. |
| (2) | The arm’s length share of costs under paragraph (1) is the allotted amount applied or deemed to be applied by a resident in an agreement on arm’s length cost sharing with a person other than a foreign related party and shall be calculated by allotting the costs, etc. for jointly developing an intangible asset in proportion to the benefits expected from such intangible asset (hereafter in this Article referred to as "expected benefits"); provided, where costs, etc. are deemed not shared in accordance with the initial agreement due to a natural disaster or any other force majeure cause, the amount recalculated in consideration of the relevant cause may be the arm's length share of costs. <Amended on Dec. 21, 2021> |
| (3) | Where a resident and a foreign related party conclude an agreement to determine shares of respective participants by reasonably allotting the costs, etc. for a jointly developed intangible asset but the expected benefits from such intangible asset are subsequently changed by not less than the rate prescribed by Presidential Decree, comparing to the expected benefits initially assessed as at the time of concluding the agreement, the tax authority may determine or rectify the tax base and tax amount of the resident by adjusting the original shares of the participants based on the expected benefits as changed. |
| (4) | For the purposes of applying paragraphs (1) through (3), the scope of intangible assets, the assessment of the arm’s length share of costs and expected benefits, the computation of the changed shares of participants, and other necessary matters shall be prescribed by Presidential Decree. |
| Article 10 (Transaction involving third party) |
Even when a resident engages in an international transaction with a person, other than a foreign related party, if the transaction satisfies all of the following criteria, Articles 6 through 9 shall apply to the transaction assuming that such transaction is conducted with a foreign related party:
| 1. | The relevant resident and a foreign related party have made prior arrangements (including where a substantial agreement is deemed to have been reached in advance based on evidence of transaction; hereinafter the same shall apply) for the transaction; |
| 2. | The terms and conditions of the transaction have been substantially determined between the relevant resident and a foreign related party. |
| Article 11 (Recognition of offset transactions) |
| (1) | Even in an international transaction in which the transfer price is lower or higher than the arm's length price, if all of the following requirements are met, Articles 6 through 8 shall apply treating all the international transactions so offset as a single international transaction: |
| 1. | A resident shall enter into an agreement in advance with the same foreign related party to offset the difference through another international transaction conducted during the same taxable year; |
| 2. | The relevant resident shall prove the prior agreement and details of the offset transaction. |
| (2) | Where any of the offset transactions proved in accordance with paragraph (1)2 becomes subject to withholding tax as provided in Articles 156 and 156-2 through 156-9 of the Income Tax Act and Articles 98 and 98-2 through 98-8 of the Corporate Tax Act, the relevant provisions of withholding tax shall apply, assuming that there is no offset transaction. <Amended on Dec. 31, 2024> |
| Article 12 (Countermeasures against tax adjustment by contracting states) |
| (1) | Where any Contracting State adjusts a transfer price between a resident and a foreign related party at the arm’s length price and the mutual agreement procedure thereon is completed, the tax authority may adjust and calculate the tax base and tax amount of the resident for each taxable year according to the relevant agreement. |
| (2) | A resident who intends to have the tax base and tax amount adjusted for each taxable year pursuant to paragraph (1) shall file a revised return or a rectification claim, as prescribed by Presidential Decree. |
| Article 13 (Disposal of income and tax adjustment) |
| (1) | Pursuant to Articles 6, 7, 9, 12, and 15, where it is not verified that the amount to be included in gains of a domestic corporation has been returned by a foreign related party to such corporation as prescribed by Presidential Decree, such amount shall be disposed of as a dividend to, or adjusted as an investment in, the foreign related party as prescribed by Presidential Decree, notwithstanding Article 67 of the Corporate Tax Act. |
| (2) | The amount not returned to a foreign related party among the income of a resident, the amount of which has been reduced pursuant to Articles 6, 7, 9, 12, and 15, shall be deemed the income not included in the gross income pursuant to subparagraph 2 of Article 18 of the Corporate Tax Act, and thereby shall not be included in the gross income of a domestic corporation or shall not be deemed the income of a resident (referring to a resident other than a domestic corporation). |
| (3) | For the purposes of applying paragraphs (1) and (2), the method of disposal of income and other necessary matters shall be prescribed by Presidential Decree. |
Subsection 2 Advance Pricing Agreements
| Article 14 (Application for advance pricing agreements and approval therefor) |
| (1) | Where a resident intends to apply a specific arm's length pricing method for a specific period of taxable years, he or she may file an application for an advance pricing agreement with the Commissioner of the National Tax Service by the day before the start date of the first taxable year among the specific period of taxable years to which the arm’s length pricing method is to be applied, as prescribed by Presidential Decree. |
| (2) | Upon receipt of a resident’s application for an advance pricing agreement pursuant to paragraph (1), the Commissioner of the National Tax Service may accept such application if agreed with the competent authority of the other Contracting State by mutual agreement, as prescribed by Presidential Decree; provided, the Commissioner may accept such application even without undergoing the mutual agreement procedure (hereinafter referred to as "unilateral advance pricing agreement") in cases prescribed by Presidential Decree. |
| (3) | Where a resident files an application for the retroactive application of an arm's length pricing method to a taxable year before the proposed period of the advance pricing agreement along with an application for an advance pricing agreement under paragraph (1), the Commissioner of the National Tax Service may approve the retroactive application of the method, to the extent that the exclusion period for the imposition of national taxes under the proviso of Article 26-2(1) of the Framework Act on National Taxes (or the time limit specified in the main clause, with the exception of the subparagraphs, of Article 45-2(1) of that Act, in cases of a unilateral advance pricing agreement) has not elapsed. |
| Article 15 (Compliance with terms and conditions of advance pricing agreements) |
| (1) | Where an arm's length pricing method is agreed upon pursuant to Article 14, the relevant resident and the Commissioner of the National Tax Service shall follow the agreed method; provided, the agreed method need not be followed in cases prescribed by Presidential Decree. |
| (2) | Where an arm's length pricing method is agreed upon pursuant to Article 14, the relevant resident shall report the tax base and tax amount computed by the approved method to the head of a tax office having jurisdiction over the place for tax payment by the deadline specified in Article 6(1)1 every year; and if necessary, the resident shall file a revised return or a rectification claim, as prescribed by Presidential Decree. <Amended on Dec. 31, 2024> |
| (3) | Where an arm's length pricing method is agreed upon pursuant to Article 14, the relevant resident shall submit a report containing the arm's length price computed by the method and the process of computation, etc. to the Commissioner of the National Tax Service each year within the taxable period under Article 5 of the Income Tax Act or within 12 months from the end of the month in which the end date of the fiscal year under Article 6 of the Corporate Tax Act falls, as prescribed by Presidential Decree. |
Subsection 3 Submission of Data on International Transactions and Special Cases on Application of Penalty Taxes
| Article 16 (Obligation to submit data on international transactions) |
| (1) | The following taxpayers shall submit a Master File, Local Files, and Country-by-Country Reports prescribed by Presidential Decree regarding their business activities, the details of transactions, etc. (hereinafter referred to as "consolidated report on international transaction information") to the head of a tax office having jurisdiction over the place for tax payment within 12 months from the end of the month in which the end date of the fiscal year under Article 6 of the Corporate Tax Act falls, as classified in the following: |
| 1. | A taxpayer who meets the requirements prescribed by Presidential Decree, in terms of the turnover and the volume of international transactions with a foreign related party: A Master File and Local Files; |
| 2. | A taxpayer who meets the requirements prescribed by Presidential Decree, in terms of turnover, etc.: Country-by-Country Reports. |
| (2) | A taxpayer that conducts international transactions with a foreign related party shall submit the following documents to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under Article 5 of the Income Tax Act or within six months from the end of the month in which the end date of the fiscal year under Article 6 of the Corporate Tax Act falls; provided, where the taxpayer meets the requirements prescribed by Presidential Decree, he or she shall be exempted from the obligation to submit the documents specified in subparagraphs 1 through 3: <Amended on Dec. 31, 2022; Dec. 31, 2023; Oct. 1, 2025> |
| 1. | A statement of international transactions in the form prescribed by Decree of the Ministry of Finance and Economy (hereinafter referred to as "statement of international transactions"); |
| 2. | A summary income statement of a foreign related party in the form prescribed by Decree of the Ministry of Finance and Economy (hereafter in this Article referred to as "summary income statement"); |
| 3. | A report on arm's length pricing method in the form prescribed by Decree of the Ministry of Finance and Economy (hereafter in this Article referred to as "report on arm's length pricing method"). |
| (3) | Where a taxpayer is unable to submit a consolidated report on international transaction information, a statement of international transactions, a summary income statement, or a report on arm's length pricing method by the deadline specified in paragraph (1) or (2) due to any unavoidable cause prescribed by Presidential Decree and files an application to extend such deadline, the head of a tax office having jurisdiction over the place for tax payment may extend the deadline for submission by up to one year. |
| (4) | For the purposes of applying Articles 7 through 9, the tax authority may request a taxpayer to submit related data, such as the method of computing transfer prices, as prescribed by Presidential Decree. |
| (5) | A taxpayer in receipt of a request to submit data pursuant to paragraph (4) shall submit the relevant data within 60 days from the date of receiving such request; provided, where a taxpayer applies for an extension of the deadline for submission for good cause prescribed by Presidential Decree, the tax authority may approve the extension of the deadline for submission only once by up to 60 days. |
| (6) | Where a taxpayer in receipt of a request to submit data pursuant to paragraph (4) fails to submit data by the deadline without good cause prescribed by Presidential Decree and submits the data at the time of applying for appeal, or of undergoing the mutual agreement procedure, the tax authority and related agencies need not use such data for taxation. |
| (7) | Where a taxpayer required to submit a Master File and Local Files pursuant to paragraph (1)1 or a taxpayer in receipt of a request to submit data prescribed by Presidential Decree regarding the calculation of arm's length price, among the data referred to in paragraph (4), fails to submit the data by the deadline without good cause prescribed by Presidential Decree, the tax authority may apply Articles 7 and 9 presuming the arm’s length price and the arm’s length share of costs in a rational manner, on the basis of data available to the tax authority including data acquired from business entities engaging in similar business. |
| (8) | Matters necessary for the detailed scope, methods, procedures, etc. of the submission of a consolidated report on international transaction information or a statement of international transactions shall be prescribed by Presidential Decree. |
| Article 17 (Special cases regarding application of penalty taxes) |
| (1) | For the purposes of this Section, the tax authority shall not assess a penalty tax for underreporting under Article 47-3 of the Framework Act on National Taxes in any of the following cases: |
| 1. | Where it is verified by the mutual agreement procedure that a taxpayer has not been negligent with regard to the difference between the transfer price reported by the taxpayer and the arm’s length price; |
| 2. | Where a taxpayer has entered into a unilateral advance pricing agreement, and the Commissioner of the National Tax Service determines that the taxpayer has not been negligent with regard to the difference between the transfer price reported and the arm’s length price; |
| 3. | Where a taxpayer keeps and provides data verifying the arm's length pricing method applied in filing his or her income tax or corporate tax return or submits Local Files pursuant to Article 16(1) by the deadline, and is acknowledged as having selected and applied the arm's length pricing method based on rational decision-making. |
| (2) | Whether a taxpayer has been negligent or made rational decisions under the subparagraphs of paragraph (1) shall be determined in accordance with the standards prescribed by Presidential Decree. |
Subsection 4 Adjustment of Arm’s Length Prices for National Taxes and Customs Value
| Article 18 (Pre-adjustment of arm’s length pricing method for national taxes and method for customs valuation) |
| (1) | A resident who applies for an advance pricing agreement on national tax pursuant to Article 14(1) (limited to cases subject to a unilateral advance pricing agreement) may file an application for advance agreement on the method for customs valuation under Article 37(1)3 of the Customs Act (hereafter in this Article referred to as "advance customs value agreement") with the Commissioner of the National Tax Service, for pre-adjustment of the arm’s length price for national tax and the customs value (hereafter in this Article referred to as "pre-adjustment"). |
| (2) | Upon receipt of an application under paragraph (1), the Commissioner of the National Tax Service shall notify the Commissioner of the Korea Customs Service of such receipt, along with an application for advance customs valuation agreement, and shall consult with the Commissioner of the Korea Customs Service about the arm's length pricing method, the method for customs valuation, and the range of price to be pre-adjusted, as prescribed by Presidential Decree. |
| (3) | The Commissioner of the National Tax Service shall make a pre-adjustment based on the results of consultation under paragraph (2). |
| (4) | The Commissioner of the National Tax Service shall notify the applicant for pre-adjustment and the Minister of Finance and Economy of the results of processing the application under paragraph (1). <Amended on Oct. 1, 2025> |
| (5) | Matters necessary for the methods and procedures, etc. for filing an application for pre-adjustment under paragraphs (1) through (4) shall be prescribed by Presidential Decree. |
| Article 19 (Requests for rectification of national taxes following rectification of customs value) |
| (1) | Where a taxpayer has submitted a return on his or her income tax base or corporate tax base to the tax authority in connection with the import transaction of goods from a foreign related party and, subsequently, any difference occurs between the customs value and the transfer price used for computing the tax base and tax amount of the income tax or corporate tax returned due to a rectification made by the head of a customs office under Article 38-3(6) of the Customs Act, the taxpayer may file a claim for rectifying the tax base and tax amount of the income tax or corporate tax with the tax authority, as prescribed by Presidential Decree. In such cases, the taxpayer shall file a rectification claim within three months from the date he or she becomes aware of the rectification by the head of the customs office (or from the date of receipt, where he or she receives notice of such rectification). |
| (2) | Upon receipt of a claim for rectification under paragraph (1), the tax authority may rectify the tax amount if he or she deems that, in connection with the relevant transaction, the method of, and grounds, etc. for, computation of the transfer price of the imported goods used for calculating the tax base and tax amount of the income tax or corporate tax conform to Article 8. |
| (3) | The tax authority shall rectify the tax base and tax amount or notify the claimant of the purport that no ground exists to make a rectification, within two months from the date of receiving the claim for rectification under paragraph (1). |
| Article 20 (Adjustment of taxation on arm’s length prices for national taxes and customs value) |
| (1) | A taxpayer may file an application with the Minister of Finance and Economy for adjustment of the arm's length price for national tax and the customs value within 30 days from the date of receiving notice under Article 19(3) (or upon expiration of two months if he or she receives no notice within two months). <Amended on Oct. 1, 2025> |
| (2) | Where a taxpayer files an application for adjustment pursuant to paragraph (1), the Minister of Finance and Economy may recommend the competent tax authority or the head of the relevant customs office to adjust the arm's length price for national tax and the customs value. In such cases, the Minister of Finance and Economy shall request an implementation plan for the recommendation for adjustment (in cases of non-implementation, including the grounds therefor) from the tax authority or the head of the customs office and shall notify the taxpayer thereof within 90 days from the date of receiving such application for adjustment. <Amended on Oct. 1, 2025> |
| (3) | Matters necessary for filing an application for adjustment, the methods of adjustment, etc. under paragraphs (1) and (2) shall be prescribed by Presidential Decree. |
| (4) | The period from the date of filing an application for adjustment to the date of receiving notice under paragraphs (1) and (2) shall be excluded from the period for making requests or filing applications under Articles 61, 66, and 68 of the Framework Act on National Taxes and Articles 121, 131, and 132 of the Customs Act. |
| Article 21 (Provision of information on taxation of customs value) |
| (1) | The tax authority may request information or data prescribed by Presidential Decree from the head of a customs office where necessary to impose and collect taxes in relation of an international transaction and to adjust the arm’s length price for national tax and the customs value. |
| (2) | The head of a customs office in receipt of a request under paragraph (1) shall comply therewith unless there is a good reason not to do so. |
SECTION 2 ADJUSTMENT OF TAX ON INTEREST PAID TO FOREIGN CONTROLLING STOCKHOLDERS
| Article 22 (Exclusion of interest paid on excessive borrowings compared to amount of investment from deductible expenses) |
| (1) | For the purposes of this Section, the term "foreign controlling stockholder" means a person classified in the following who substantially controls either a domestic corporation or a domestic place of business of a foreign corporation, for which the specific criteria shall be prescribed by Presidential Decree: |
| 1. | In cases of a domestic corporation: Any of the following persons: |
| a. | A foreign stockholder or investor (hereinafter referred to as "foreign stockholder"); |
| b. | A foreign corporation financed by a foreign stockholder under item a; |
| 2. | In cases of a domestic place of business of a foreign corporation: Any of the following persons: |
| a. | The head office or a branch office of the foreign corporation; |
| b. | A foreign stockholder of the foreign corporation; |
| c. | Another foreign corporation financed by the foreign corporation and by a foreign stockholder under item b. |
| (2) | Where the sum of the following amounts among the borrowings of a domestic corporation (including a domestic place of business of a foreign corporation; hereafter in this Section the same shall apply) exceeds twice the amount invested by the relevant foreign controlling stockholder, the interest and discount fees paid in relation to the excess amount (hereafter in this Section referred to as "interest, etc.") shall be excluded from deductible expenses of the domestic corporation and shall be deemed to have been disposed of as a dividend of, or an outflow from, the domestic corporation pursuant to Article 67 of the Corporate Tax Act, as prescribed by Presidential Decree. In such cases, the scope of borrowings and the methods of computing the amount of investment and the amount excluded from deductible expense shall be prescribed by Presidential Decree: |
| 1. | Funds borrowed from a foreign controlling stockholder; |
| 2. | Funds borrowed from a related person specified in subparagraph 20a or b of Article 2 of the Framework Act on National Taxes, of a foreign controlling stockholder; |
| 3. | Funds borrowed from a third party under a payment guarantee (including de facto payment guarantees, such as provision of security) by a foreign controlling stockholder. |
| (3) | The multiplier of the borrowings against the amount of investment by a foreign controlling stockholder provided in paragraph (2) may be separately prescribed by Presidential Decree for each type of business, if necessary, in consideration of characteristics, etc. of the business type. |
| (4) | Where a domestic corporation attests that the amount borrowed pursuant to the subparagraphs of paragraph (2) and conditions of borrowings are identical or similar to the amount and conditions of ordinary borrowings between unrelated parties, as prescribed by Presidential Decree, paragraphs (2) and (3) shall not apply to the interest, etc. paid in relation to such borrowings. |
| (5) | Where a domestic corporation subject to paragraph (2) has withheld income tax or corporate tax on the interest, etc. that it has paid to a foreign controlling stockholder in each fiscal year, it shall offset such withheld tax amount against the income tax or corporate tax assessed on the dividend provided in paragraph (2). |
| (6) | For the purposes of applying paragraphs (2) through (5), if there exist different interest, etc. whereto separate interest rates apply, the interest, etc. shall be excluded from deductible expenses in order of those subject to a higher interest rate. |
| Article 23 (Borrowing transactions through third party) |
Where funds borrowed by a domestic corporation from a person who is not a foreign controlling stockholder satisfy all of the following requirements, Article 22 shall apply to the funds, assuming that such funds are borrowed directly from a foreign controlling stockholder; provided, Article 22 shall apply even when only the requirement provided in subparagraph 2 is satisfied if the domestic corporation has borrowed funds from a foreign related party other than a foreign controlling stockholder:
| 1. | The domestic corporation and the foreign controlling stockholder have made prior agreements for the borrowing (including where a substantial agreement is deemed to have been reached in advance based on evidence related to the borrowing); |
| 2. | The conditions for the borrowing shall be substantially determined between the domestic corporation and the foreign controlling stockholder. |
| Article 24 (Exclusion of interest overpaid compared to income from deductible expenses) |
| (1) | The terms used in this Article are defined as follows: |
| 1. | The term "net interest expense" means an amount calculated by subtracting the amount of interest income received from a foreign related party from the interest, etc. paid to the foreign related party; |
| 2. | The term "adjusted gross income" means the amount of income before subtracting both the depreciation cost and the net interest expense. |
| (2) | If the net interest expense on funds borrowed by a domestic corporation from its foreign related parties exceeds 30 percent of the adjusted gross income, the excess amount shall be excluded from deductible expenses and deemed disposed of as other outflow from the domestic corporation pursuant to Article 67 of the Corporate Tax Act. |
| (3) | Paragraph (2) shall not apply to any domestic corporation prescribed by Presidential Decree that engages in financial business or other similar business. |
| (4) | For the purposes of applying paragraph (2), if there exist different interest, etc. whereto separate interest rates apply, the interest, etc. shall be excluded from deductible expenses in order of those subject to a higher interest rate. |
| (5) | The method of computing the net interest expense and adjusted gross income and other necessary matters shall be prescribed by Presidential Decree. |
| Article 25 (Exclusion of interest paid on hybrid financial instrument transactions from deductible expenses) |
| (1) | The term "hybrid financial instrument" in this Article means a financial instrument prescribed by Presidential Decree that has the nature of both capital and liabilities. |
| (2) | The interest, etc. paid by a domestic corporation in relation to hybrid financial instrument transactions with a foreign related party, which are not included in the income of the counter-party to such transactions nor taxable in the country where the counter-party is located within the period prescribed by Presidential Decree (hereafter in this Article referred to as "reasonable period"), shall be included in gains, as prescribed by Presidential Decree, in calculating the amount of income for the fiscal year in which the end date of the reasonable period falls and shall be deemed disposed of as other outflow from the domestic corporation pursuant to Article 67 of the Corporate Tax Act. In such cases, the domestic corporation shall additionally pay an amount equivalent to interest calculated as prescribed by Presidential Decree, plus the corporate tax for the fiscal year in which the end date of the reasonable period falls. |
| (3) | A domestic corporation which includes any amount in gains under the former part of paragraph (2) shall submit data on hybrid financial instrument transactions to the head of a tax office having jurisdiction over the place for tax payment by the filing deadline specified in Articles 60(1) and 76-17(1) of the Corporate Tax Act based on the fiscal year in which the end date of the reasonable period falls. <Added on Dec. 31, 2022> |
| (4) | The scope of hybrid financial instrument transactions, the scope of non-taxable amounts, and other necessary matters shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2022> |
| Article 26 (Order of applying exclusion of paid interest from deductible expenses) |
| (1) | Where Articles 22 and 24 are concurrently applicable, the Article that precludes the inclusion of larger amount in deductible expenses shall apply. In such cases, if the amounts calculated according to both Articles are the same, Article 22 shall apply. |
| (2) | Article 22 or 24 shall take precedence over the following provisions: <Amended on Dec. 31, 2024> |
| 2. | Article 28 of the Corporate Tax Act; |
| 3. | Provisions prescribed by Presidential Decree among the provisions on the scope of business years for which deductible expenses are reverted under Article 40 of the Corporate Tax Act. |
| (3) | Article 25 shall take precedence over the following provisions: <Amended on Dec. 31, 2024> |
SECTION 3 Accumulative Taxation of Retained Earnings of Specific Foreign Corporations
| Article 27 (Specific foreign corporations’ retained earnings deemed dividends) |
| (1) | Where a Korean national invests in a foreign corporation which satisfies all of the following requirements (hereinafter referred to as "specific foreign corporation"), the amount attributable to the Korean national out of the specific foreign corporation's retained earnings distributable as at the end of each fiscal year shall be deemed a dividend paid to the Korean national: <Amended on Dec. 21, 2021> |
| 1. | The actual tax burden in a country or region in which the head office, principal office, or actual place of management of the foreign corporation is located shall not exceed the amount calculated in accordance with the following formula: |
┌─────────────────────────────────────────┐
│ The income actually earned by a foreign corporation x 70 % of the maximum tax rate among tax rates specified in Article 55 of the Corporate Tax Act │
└─────────────────────────────────────────┘
| 2. | The foreign corporation shall be in a special relationship (when determining whether it is in the relationship provided in Article 2(1)3a, stocks owned directly or indirectly by a person prescribed by Presidential Decree, including a relative of the Korean national, shall be included) with the Korean national who invests in the foreign corporation. |
| (2) | Korean nationals to whom paragraph (1) is applicable shall be those who directly or indirectly hold at least 10 percent of the total outstanding stocks or the total equity investment of a specific foreign corporation as at the end of each fiscal year. In such cases, outstanding stocks or equity investment held directly by the related persons of a Korean national specified in subparagraph 20a or b of Article 2 of the Framework Act on National Taxes shall be included for the purposes of determining 10 percent of the total outstanding stocks or the total equity investment. |
| (3) | Where a Korean national directly or indirectly owns any beneficial interest of a foreign trust (referring to a trust that is established under foreign statutes or regulations and similar to a trust prescribed in any of the subparagraphs of Article 5(2) of the Corporate Tax Act), paragraphs (1) and (2) shall apply as each trust property is deemed one foreign corporation. <Amended on Dec. 21, 2021> |
| (4) | The actual tax burden of a specific foreign corporation under paragraph (1)1, the scope of the income actually earned by such corporation, and other matters shall be prescribed by Presidential Decree. <Amended on Dec. 21, 2021> |
| Article 28 (Exclusion of application of specific foreign corporations’ retained earnings deemed dividends) |
‘ Article 27 shall not apply to a specific foreign corporation falling under any of the following cases: <Amended on Dec. 21, 2021; Dec. 31, 2022; Oct. 1, 2025>
| 1. | Where the income actually earned by a specific foreign corporation as of the end of each fiscal year does not exceed the amount prescribed by Presidential Decree; |
| 2. | Where a specific foreign corporation owns a permanent establishment, such as an office, a store, or a factory, that is required for business activities in a country or region in which it is located; and engages in business activities mainly in such country or region by managing, controlling, or operating the business for itself; |
| 3. | Where a specific foreign corporation, whose primary business is to hold stocks in compliance with requirements prescribed by Presidential Decree (hereafter in this subparagraph referred to as "foreign holding company"), holds stocks issued by its affiliate (referring to a foreign corporation that meets all the requirements prescribed by Presidential Decree; hereafter in this subparagraph the same shall apply) in compliance with all of the following requirements: |
| a. | The foreign holding company shall have held stocks issued by all of its affiliates for at least six consecutive months as of the date of record for dividends by the affiliates; |
| b. | The rate of income calculated by the following formula, considering the interest income, dividend income, etc. received by the foreign holding company that holds stocks issued by its affiliates in compliance with the requirements specified in item a, from its affiliates, shall be equal to or exceed the rate prescribed by Presidential Decree as of the end of each fiscal year. |
┌───────────────────────────────────────────┐
│ │
│ The rate of income = A │
│ ─────────── │
│ B-C-D │
│ │
│ A: The total amount of interest income, dividend income, and other income prescribed by Presidential Decree that the foreign holding company │
│ has received from any of its affiliates having its head office or principal office in the same country │
│ as the foreign holding company or the same region prescribed by Decree of the Ministry of Finance and Economy (hereafter in Article 29 referred to as "same country, etc.") │
│ among the affiliates whose stocks are held by the foreign holding company in compliance with the requirements specified in item a; │
│ B: The income amount of the foreign holding company; │
│ C: The income amount that the foreign holding company generates by actually │
│ engaging in any business other than those provided in the subparagraphs of │
│ Article 29(1) at its permanent establishment, such as an office, a store, or a factory; │
│ D: The income amount generated as the foreign holding company disposes of the stocks issued │
│ by its affiliates that it has held in compliance with the requirements specified in item a. │
└───────────────────────────────────────────┘
| Article 29 (Exceptional application of specific foreign corporations’ retained earnings deemed dividends) |
| (1) | Even in cases of a specific foreign corporation to which Article 27 is not applicable pursuant to subparagraph 2 of Article 28, where such corporation falls under any of the following, Article 27 shall apply; provided, Article 27 shall not apply where a specific foreign corporation that engages in wholesale trade referred to in subparagraph 1a makes a sale to an unrelated person in the same country, etc., and such sale satisfies the requirements prescribed by Presidential Decree: <Amended on Dec. 31, 2022; Oct. 1, 2025> |
| 1. | A specific foreign corporation satisfying the requirements prescribed by Presidential Decree that engages in the following types of business under the Korean Standard Industrial Classification prepared and publicly notified by the Minister of Data and Statistics pursuant to Article 22 of the Statistics Act: |
| b. | Financial and insurance activities; |
| c. | Real estate activities; |
| d. | Professional, scientific, and technical activities (excluding architectural, engineering, and related technical services); |
| e. | Business facilities management, business support, and leasing services; |
| 2. | A corporation whose primary business is to engage in the following activities, for which the criteria for determining the primary business shall be prescribed by Presidential Decree: |
| a. | Holding stocks or bonds; |
| b. | Provision of intellectual property rights; |
| c. | Lease of ships, aircraft, or equipment; |
| d. | Investing in investment trusts or funds. |
| (2) | Even in cases of a specific foreign corporation to which Article 27 is not applicable pursuant to subparagraph 2 of Article 28 or the proviso, with the exception of the subparagraphs, of paragraph (1) of this Article, where the following income (hereafter in this Section referred to as "passive income") meets the standards prescribed by Presidential Decree, Article 27 shall apply to the relevant income: <Amended on Dec. 31, 2022; Oct. 1, 2025> |
| 1. | Income generated from the activities specified in the items of paragraph (1)2; |
| 2. | Profits and losses from the sale of assets related to income generated from the activities specified in the items of paragraph (1)2 (where a specific foreign corporation that engages in financial and insurance activities under the Korean Standard Industrial Classification prepared and publicly notified by the Minister of Data and Statistics under Article 22 of the Statistics Act holds assets related to income generated from the activities specified in paragraph (1)2a in connection with the performance of financial and insurance activities or a specific foreign corporation directly uses assets related to income generated from the activities prescribed in paragraph (1)2c for its business, the relevant assets shall be excluded). |
| Article 30 (Computation of distributable retained earnings and amounts deemed dividends) |
| (1) | The amount deemed a dividend to be distributed to a Korean national pursuant to Article 27(1) (hereafter in this Section referred to as "amount deemed a dividend") shall be computed according to the following formula: |
┌───────────────────────────────────────────┐
│ The distributable retained earnings of a specific foreign corporation as of the end of each business year X │
│ the stockholding ratio of the relevant Korean national in the specific foreign corporation. │
└───────────────────────────────────────────┘
| (2) | Notwithstanding paragraph (1), where Article 29(2) is applied, the amount deemed a dividend shall be computed according to the following formula: |
┌──────────────────────────────────────────┐
│ │
│ The distributable retained earnings of a specific foreign corporation as of the end of each business year │
│ X the stockholding ratio of the relevant Korean national in the specific foreign corporation │
│ X {(the sum of passive income - the amount prescribed by Presidential Decree) │
│ / the total income of the specific foreign corporation} │
│ │
└──────────────────────────────────────────┘
| (3) | Matters necessary for calculating the amount deemed a dividend, such as the method of calculating the distributable retained earnings and the ratio of holding stocks under paragraphs (1) and (2), shall be prescribed by Presidential Decree. |
| Article 31 (Timing of treating dividends as taxable gains) |
The amount deemed a dividend shall be included in a Korean national's gains or dividend income (hereafter in this Section referred to as "gains, etc.") for the taxable year in which the 60th day falls from the date following the end of the pertinent fiscal year of the specific foreign corporation.
| Article 32 (Exclusion of actual dividends from taxable gains) |
| (1) | Where the amount deemed a dividend is included in the gains, etc. of a Korean national under Article 31 and the relevant specific foreign corporation actually distributes its retained earnings as dividends (including the amount deemed dividends or distributions pursuant to Article 16 of the Corporate Tax Act), the distributed amount shall be deemed the income not included in the gains, etc. pursuant to subparagraph 2 of Article 18 of the Corporate Tax Act or deemed not to fall within the dividend income under Article 17(1) of the Income Tax Act. |
| (2) | Where a Korean national has transferred the stocks of the relevant specific foreign corporation after the amount deemed dividends is included in the gross income, etc. of a Korean national under Article 31, the amount calculated by the following formula within the limit of capital gains (where the amount is zero or less, it shall be deemed zero) shall be deemed as income not included in gross income under subparagraph 2 of Article 18 of the Corporate Tax Act, or shall not be deemed as capital gains under Article 94(1)3c of the Income Tax Act. <Amended on Dec. 21, 2021; Dec. 31, 2024> |
┌─────────────────────────────────────────┐
│ (The amount equivalent to the sum of the amounts deemed the dividends on the transferred stocks) │
│ - (the amount of actually distributed dividends on the transferred stocks) │
└─────────────────────────────────────────┘
| (3) | The books of account and evidentiary documents necessary for calculating the amount pursuant to paragraphs (1) and (2) shall be preserved until the expiration of the statutory deadline for filing a return for the taxable year in which the date of dividend payment or transfer falls, notwithstanding Article 85-3(2) of the Framework Act on National Taxes. |
| Article 33 (Deduction of taxes paid to foreign countries and rectification claims therefor) |
| (1) | Where a specific foreign corporation actually distributes a dividend to a Korean national, if such corporation has paid taxes to a foreign country, a deemed dividend for the taxable year, which is included in gains, etc. pursuant to Article 31, shall be deemed an income generated in a foreign country, while the taxes paid to the foreign country as at the time of the actual distribution shall be deemed paid to the foreign country in the taxable year during which the amount is included in gains, etc. pursuant to Article 31, and therefore Article 57(1) and (2) of the Income Tax Act and Article 57(1) and (2) of the Corporate Tax Act shall apply thereto. |
| (2) | A person who seeks application of paragraph (1) shall file a rectification claim with the head of a tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree, within one year from the deadline for filing the income tax or corporate tax return of the taxable year in which he or she has actually received a dividend. |
| (3) | For the purposes of Article 57(4) of the Corporate Tax Act, a deemed dividend included in gains, etc. pursuant to Article 31 shall be deemed a dividend earned during the taxable year in which it is included in gains, etc. |
| Article 34 (Submission of data on specific foreign corporations) |
A Korean national subject to Articles 27 through 33 shall submit the following documents to the head of a tax office having jurisdiction over the place for tax payment by the deadline for filing a tax return set under Articles 70(1) and 70-2(2) of the Income Tax Act or Articles 60(1) and 76-17(1) of the Corporate Tax Act, as prescribed by Presidential Decree:
| 1. | Financial statements of a specific foreign corporation; |
| 2. | A corporate tax return of a specific foreign corporation and supporting documents; |
| 3. | A detailed statement on calculation of retained earnings of a specific foreign corporation; |
| 4. | Other documents prescribed by Presidential Decree. |
SECTION 3-2 Special Cases concerning Imposition of Tax on Income Attributable to Foreign Transparent Entities
| Article 34-2 (Special cases concerning imposition of tax on income attributable to foreign transparent entities) |
| (1) | The term "foreign transparent entity" in this Article means an entity that satisfies all of the following requirements: |
| 1. | It shall be a foreign corporation defined in subparagraph 3 of Article 2 of the Corporate Tax Act, a foreign investment scheme under Article 93-2 of that Act, or an organization that is similar to an organization other than a corporation under Article 13(1) of the Framework Act on National Taxes and that is established in a foreign country (hereafter in this paragraph referred to as "foreign corporation, etc."); |
| 2. | In a country in which a foreign corporation, etc. is established or its head office or principal office is located, a stockholder, investor, or beneficiary (hereafter in this Article referred to as "investor, etc.") of a foreign corporation, etc. other than the relevant foreign corporation, etc. shall be directly liable to pay a tax on its income in accordance with the tax laws of such country. |
| (2) | Where a resident or domestic corporation prescribed by Presidential Decree that constitutes an investor, etc. of a foreign transparent entity files an application for applying special cases concerning the imposition of tax prescribed in this Article (hereinafter referred to as "special cases concerning the imposition of tax on a foreign transparent entity") pursuant to paragraph (3), the Income Tax Act or the Corporate Tax Act shall apply as the income attributable to a foreign transparent entity is deemed attributable to such investor, etc. |
| (3) | An investor, etc. who intends to be subject to the application of paragraph (2) shall file an application for applying special cases concerning the imposition of tax on a foreign transparent entity with the head of a tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree. |
| (4) | An investor, etc. shall not renounce the application of special cases concerning the imposition of tax on a foreign transparent entity except for cases prescribed by Presidential Decree, such as where the foreign transparent entity fails to meet the requirements prescribed in the subparagraphs of paragraph (1) after the investor, etc. subject to the application of paragraph (2) files an application for applying such special cases. |
| (5) | Paragraphs (2) through (4) shall apply to an investment trust, investment limited partnership, and undisclosed investment association under the Financial Investment Services and Capital Markets Act (hereafter in this paragraph referred to as "investment trust, etc.") as such investment trust, etc. are deemed domestic corporations. |
| (6) | Where paragraph (2) is applicable, the income attributable to an investor, etc. shall be in accordance with the classification of the income attributable to a foreign transparent entity, and the income shall be deemed immediately attributable to the investor, etc. when it is attributable to the foreign transparent entity. |
| (7) | The income of a foreign transparent entity that is included in the total earnings or gains of an investor, etc. and that is actually distributed by the foreign transparent entity to the investor, etc. pursuant to paragraph (2) shall be deemed the income not included in the total earnings or gains. |
| (8) | The amount of tax imposed on an investor, etc. in a foreign country with regard to the income of a foreign transparent entity that is deemed directly attributable to the investor, etc. under paragraph (2) shall be deemed the amount of foreign income tax or the amount of foreign corporate tax entitled to the application of a tax credit under Article 57(1) of the Income Tax Act or Article 57(1) of the Corporate Tax Act, as prescribed by Presidential Decree. |
| (9) | Where paragraph (2) is applicable, provisions of Article 27 regarding specific foreign corporations' retained earnings deemed dividends shall not apply. |
| (10) | The calculation and allocation of the income, deficits, etc. of an investor, etc. subject to the application of paragraph (2), and other necessary matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
SECTION 4 Special Cases regarding Imposition of Gift Tax on Overseas Donation
| Article 35 (Special cases regarding imposition of gift tax on overseas donation) |
| (1) | The terms used in this Section are defined as follows: |
| 1. | The term "resident" means a resident defined in subparagraph 8 of Article 2 of the Inheritance Tax and Gift Tax Act, including a non-profit corporation that has its head office or principal office in the Republic of Korea; |
| 2. | The term "nonresident" means a nonresident defined in subparagraph 8 of Article 2 of the Inheritance Tax and Gift Tax Act, including a non-profit corporation that has no head office or principal office in the Republic of Korea. |
| (2) | Where a resident donates his or her foreign property (excluding a donation that takes effect upon the death of a donor) to a nonresident, the donor is liable to pay gift tax pursuant to this Act. |
| (3) | Notwithstanding paragraph (2), where all of the following requirements are met, the gift tax shall be exempted: |
| 1. | The donee shall not be a related person defined in subparagraph 20 of Article 2 of the Framework Act on National Taxes, to the donor; |
| 2. | The relevant donated property shall be subject to gift tax (including taxes of a substantially similar thereto) imposed pursuant to statutes or regulations of the relevant foreign country, which includes exemption of the tax amount. |
| (4) | For the purposes of applying paragraph (2), the value of donated property shall be based on its assessed value reflecting the situations as at the time of such donation in the foreign country wherein the donated property is located, but the matters regarding the computation of such assessed value shall be prescribed by Presidential Decree; provided, when it is impracticable to compute the assessed value, the methods prescribed by Presidential Decree shall apply, taking account of the type, scale, and circumstances of the transaction of the relevant property. |
| (5) | For the purposes of applying paragraph (2), where gift tax has been paid pursuant to statutes or regulations of the relevant foreign country, the amount equivalent to the gift tax paid shall be deducted from the amount of the gift tax computed, as prescribed by Presidential Decree. |
| (6) | Articles 4-2(3), 47, 53, 54 through 58, 68, 69(2), 70 through 72, and 76 of the Inheritance Tax and Gift Tax Act shall apply mutatis mutandis to the imposition of gift tax under paragraph (2). <Amended on Dec. 31, 2023> |
CHAPTER III INTERNATIONAL COOPERATION IN TAX ADMINISTRATION
SECTION 1 International Cooperation in Tax Affairs
| Article 36 (Exchange of tax and financial information) |
| (1) | The competent authority of the Republic of Korea may obtain tax information [including information on an individual who ultimately controls or exercises power over a taxpayer (hereinafter referred to as "actual owner"); hereinafter the same shall apply)] necessary for the imposition and collection of taxes, review of tax appeals, and criminal prosecution, etc., as well as tax information generalized by international practices to the extent not in contravention of other statutes, and may exchange such information with the other Contracting State. |
| (2) | Where it is necessary to exchange tax information under paragraph (1), the tax authority may request a taxpayer to provide information on the actual owner of the taxpayer; and the scope of information on the actual owner that the tax authority may request from the taxpayer and matters necessary for requesting and submitting information on the actual owner shall be prescribed by Presidential Decree. |
| (3) | Where the competent authority of the other Contracting State demands financial information (referring to information or data relating to the details of financial transactions defined in subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality; hereafter the same shall apply) on residents and domestic corporations or nonresidents and foreign corporations under the tax treaty, the competent authority of the Republic of Korea may request a specific branch of a financial company, etc. (referring to a financial company, etc. defined in subparagraph 1 of Article 2 of the aforesaid Act; hereinafter the same shall apply) to provide any of the following financial information, notwithstanding Article 4 of the aforesaid Act; and an employee of the financial company, etc. shall provide the financial information requested: <Amended on Dec. 31, 2023> |
| 1. | Financial information that constitutes data for taxation that shall be submitted under tax-related statutes; |
| 2. | Financial information necessary to verify property acquired by inheritance or donation; |
| 3. | Financial information necessary for the competent authority of the other Contracting State to verify data sufficient to prove a suspicion of tax evasion; |
| 4. | Financial information necessary to inquiry about the property of a delinquent taxpayer of the other Contracting State; |
| 5. | Financial information required by the competent authority of the other Contracting State due to any of the causes provided in the subparagraphs of Article 9(1) of the National Tax Collection Act. |
| (4) | Where any information requested by the competent authority of the other Contracting State pursuant to paragraph (3) falls under the following cases, the competent authority of the Republic of Korea may request the head of the relevant financial company, etc. to provide such financial information, in which case an employee of the financial company, etc. shall provide the financial information requested: |
| 1. | Where the relevant information is related to a group that is unable to specify the personal information of a title holder related to the specific financial transaction; |
| 2. | Where the relevant information can be obtained through a general inquiry about financial property under Article 83(1) of the Inheritance Tax and Gift Tax Act. |
| (5) | Notwithstanding paragraphs (3) and (4), the competent authority of the Republic of Korea may restrict the provision of financial information to the other Contracting State on the principle of reciprocity. |
| (6) | If it is deemed necessary for the exchange of regular financial information, etc. (referring to information or data prescribed by Presidential Decree as information or data on the details of financial transactions, etc. (referring to the following transactions; hereinafter the same shall apply)) based on reciprocity with the other contracting State in accordance with a tax treaty, notwithstanding Article 4 of the Act on Real Name Financial Transactions and Confidentiality and other Acts on the provision of information or data on financial transactions , etc., the competent authority of the Republic of Korea may request the head of a financial transaction company, etc. (referring to a person who conducts financial transactions, etc. prescribed by Presidential Decree; hereinafter the same shall apply) to provide financial information, etc. on residents, domestic corporations, or non-residents, or foreign corporations necessary for the imposition and collection of tax and the management of tax payment. In such cases, a person who is engaged in the relevant financial transaction company, etc. shall provide it, as prescribed by Presidential Decree. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| 1. | Financial transactions under subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality; |
| 2. | Transactions prescribed by Presidential Decree among transactions for cryptographic assets (referring to assets prescribed by Presidential Decree, the value of which is expressed in digital form, based on distributed ledgers encrypted safely for certifying and protecting transactions or similar technologies); |
| 3. | Other transactions prescribed by Presidential Decree, which are equivalent to those referred to in subparagraph 1 or 2. |
| (7) | Although no request is made pursuant to paragraph (6), financial transaction companies, etc. may verify and maintain personal information, etc. including taxpayer identification numbers (referring to unique numbers assigned to each taxpayer by an individual country for identification purposes) of the counter-parties to financial transactions, etc. (including the counter-parties to financial transactions, etc. of countries other than the other contracting state under the tax treaty; hereinafter the same shall apply) of the financial transaction companies, etc. to the minimum extent necessary for the purpose of using such information, etc. in order to support the exchange of financial information, etc. among countries. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (8) | The heads of financial transaction companies, etc. who intend to provide financial information, etc. under paragraph (6) or verify financial information, etc. under paragraph (7) may request the counter-parties to financial transactions, etc. to submit data necessary to verify the personal information, etc. of the counter-parties to financial transactions, etc. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (9) | Where it is impracticable to provide financial information, etc. referred to in paragraph (6) to the competent authority of the Republic of Korea or it is impossible to verify the personal information, etc. as provided in paragraph (7) because the counter-parties to financial transactions, etc. upon receipt of a request to submit data pursuant to paragraph (8) fails to submit the requested data, the heads of the relevant financial transaction companies, etc. may refuse to open an account of the counter-parties to the financial transactions, etc. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (10) | Detailed matters regarding the exchange of tax information under paragraph (1), exchange and provision of financial information under paragraphs (3) and (4) and financial information, etc. under paragraph (6), and verification of personal information, etc. under paragraph (8) shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2023> |
[Title Amended on Dec. 31, 2023]
| Article 37 (Inquiry and verification) |
| (1) | Where it is deemed necessary for the provision of financial information, etc. under Article 36(6), a tax official may inquire the employees of financial transaction companies, etc. for the verification of personal information, etc. of the counter-parties to financial transactions, etc. under Article 36(8) and may verify documents and others. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (2) | In cases of an inquiry or verification under paragraph (1), a tax official shall not abuse his or her authority for purposes other than those necessary for performing his or her duties. |
| Article 38 (Confidentiality) |
| (1) | None of the following persons shall unfairly interfere with or delay the acquisition, exchange, or provision of tax information under Article 36(1), financial information under paragraphs (3) and (4) of that Article, or financial information, etc. under paragraph (6) of that Article: <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| 1. | Any person related to tax information under Article 36(1), financial information under paragraphs (3) and (4) of that Article, or financial information, etc. under paragraph (6) of that Article; |
| 2. | A counter-party to financial transactions, etc. under Article 36(7). |
| (2) | Upon receipt of a request to provide financial information or financial information, etc. in violation of Article 36(3), (4) or (6), the employees of financial companies, etc. or financial transaction companies, etc. shall refuse such request. <Amended on Dec. 31, 2023> |
| (3) | No person who becomes aware of financial information or financial information, etc. pursuant to Article 36(3), (4), (6), or (7) shall provide or divulge such financial information or financial information, etc. to any person other than the competent authority of the other contracting state, or use such financial information or financial information, etc. for any purpose other than the originally intended purpose, and no person shall request a person who becomes aware of such financial information or financial information, etc. to provide such financial information or financial information, etc. <Amended on Dec. 31, 2023> |
| (4) | No person who has obtained financial information or financial information, etc. provided or divulged in violation of paragraph (3) or Article 36(3), (4), or (6) shall provide or divulge such financial information or financial information, etc. to any third person if he or she becomes aware of the violation. <Amended on Dec. 31, 2023> |
| Article 39 (Cooperation in tax audit) |
| (1) | Where it is deemed necessary to conduct a tax audit on a transaction with a person to whom the tax treaty applies, the competent authority of the Republic of Korea may conduct the following acts on the transaction: |
| 1. | Conducting a tax audit on the transaction at the same time as the other Contracting State; |
| 2. | Dispatching a tax official to the other Contracting State to directly conduct a tax audit or to participate in a tax audit by the other Contracting State. |
| (2) | Where the other Contracting State requests cooperation in a tax audit under the tax treaty, the competent authority of the Republic of Korea may accept such request. |
| Article 40 (Entrustment of tax collection) |
| (1) | The head of a tax office having jurisdiction over the place for tax payment or the head of a local government may request the Commissioner of the National Tax Service to take measures necessary to collect taxes in the other Contracting State, where it is deemed inevitable that the other Contracting State collects the taxes payable as it is impracticable to collect such taxes in the Republic of Korea. |
| (2) | Upon receipt of a request under paragraph (1), the Commissioner of the National Tax Service may entrust the competent authority of the other Contracting State with the collection of the relevant taxes, as prescribed by Presidential Decree. |
| (3) | Where the competent authority of the other Contracting State entrusts the collection of taxes payable to the other Contracting State to the Republic of Korea under the tax treaty, the Minister of Finance and Economy or the Commissioner of the National Tax Service may have the head of a tax office having jurisdiction over the place for tax payment collect such taxes in the same manner as national taxes are collected, as prescribed by Presidential Decree. <Amended on Oct. 1, 2025> |
| Article 41 (Issuance of resident certificates) |
| (1) | Where a resident or a domestic corporation files an application for the issuance of documents substantiating that the person is a resident or a domestic corporation in any of the following cases, the tax authority may issue the relevant certificate, as prescribed by Presidential Decree: <Amended on Dec. 31, 2023; Dec. 23, 2025> |
| 1. | Where he, she, or it intends to be entitled to non-taxation, exemption, or a limited tax rate (referring to the maximum tax rate at which a Contracting State may impose a tax on the resident or domestic corporation under a tax treaty) under a tax treaty; |
| 2. | Where it is necessary for the implementation of a tax treaty, such as the exchange of tax information under Article 36(1), financial information under paragraphs (3) and (4) of that Article, or financial information, etc. under paragraph (6) of that Article; |
| 3. | Other cases where it is necessary to substantiate that the person is a resident or domestic corporation for any tax purpose. |
| (2) | Where a collective investment scheme falling under Article 9(18)1, 5, or 6 of the Financial Investment Services and Capital Markets Act, whose beneficial owners consist only of residents or domestic corporations, applies for the issuance of a certificate proving that its beneficial owners qualify as residents or domestic corporations for any of the reasons set forth in the subparagraphs of paragraph (1), the tax authority may issue such certificate in the name of the relevant collective investment scheme, as prescribed by Presidential Decree. <Added on Dec. 23, 2025> |
[This Article Wholly Amended on Dec. 21, 2021]
SECTION 2 Mutual Agreement Procedure
| Article 42 (Conditions for commencing mutual agreement procedure) |
| (1) | A resident or domestic corporation or a nonresident or foreign corporation may apply for commencing a mutual agreement procedure to the relevant person specified in the following, as prescribed by Presidential Decree: <Amended on Oct. 1, 2025> |
| 1. | Where it is necessary to consult with the other Contracting State on the application and interpretation of the tax treaty: The Minister of Finance and Economy; |
| 2. | Where such person or corporation has been or is likely to be subject to taxation by the tax authority of the other Contracting State, not complying with the provisions of the tax treaty: The Commissioner of the National Tax Service; |
| 3. | Where a tax adjustment is required under the tax treaty between the Republic of Korea and the other Contracting State: The Commissioner of the National Tax Service. |
| (2) | Where the competent authority of the other Contracting State entrusts the collection of taxes payable to the other Contracting State to the Republic of Korea under the tax treaty, the Minister of Finance and Economy or the Commissioner of the National Tax Service may have the head of a tax office having jurisdiction over the place for tax payment collect such taxes in the same manner as national taxes are collected, as prescribed by Presidential Decree. <Amended on Oct. 1, 2025> |
| 1. | Where the final ruling has been made by a domestic or foreign court; provided, cases prescribed by Presidential Decree shall be excluded, such as where a response to the tax adjustment by the other Contracting State is required; |
| 2. | Where the application has been filed by a person ineligible under the tax treaty; |
| 3. | Where it is recognized that the taxpayer intends to exploit a mutual agreement procedure for tax avoidance; |
| 4. | Where the application has been filed three years after the applicant became aware of the taxation. |
| (3) | In the case of paragraph (1)1, the Minister of Finance and Economy may ex officio request the competent authority of the other Contracting State to commence the mutual agreement procedure. <Amended on Oct. 1, 2025> |
| (4) | In the case of paragraph (1)2 or 3, the Commissioner of the National Tax Service may ex officio request the competent authority of the other Contracting State to commence the mutual agreement procedure. |
| (5) | Upon receiving an application under paragraph (1) or ex officio requesting the commencement of the mutual agreement procedure pursuant to paragraph (4), the Commissioner of the National Tax Service shall report thereon to the Minister of Finance and Economy; and the Minister of Finance and Economy may give an instruction as to the mutual agreement procedure, if necessary. <Amended on Oct. 1, 2025> |
| Article 43 (Arbitration for mutual agreement) |
| (1) | Where no agreement is reached between the competent authority of the Republic of Korea and the other Contracting State after the commencement of the mutual agreement procedure and within the period specified in the tax treaty, the applicant may request the Minister of Finance and Economy or the Commissioner of the National Tax Service to commence the procedures for resolving disputes (hereinafter referred to as "arbitration") through the group of arbitrators, appointed by the competent authority, respectively, as prescribed by the tax treaty. <Amended on Oct. 1, 2025> |
| (2) | Detailed matters regarding arbitration, including persons eligible to file an application for arbitration, the timing for filing an application, the scope of applicable cases, the formation of the arbitrators group, the methods of making a decision, and the validity of the arbitration decision, shall be governed by the tax treaty. |
| (3) | Detailed procedures for implementing the tax treaty stipulating specific matters regarding arbitration, including the procedure for filing an arbitration application, the appointment of arbitrators, and the burden of expenses, shall be prescribed by Presidential Decree. |
| Article 44 (Applicants’ obligations to cooperate) |
| (1) | The Minister of Finance and Economy or the Commissioner of the National Tax Service may request an applicant to submit data necessary for proceeding with the mutual agreement procedure. <Amended on Oct. 1, 2025> |
| (2) | The Minister of Finance and Economy or the Commissioner of the National Tax Service may terminate ex officio the mutual agreement procedure if the applicant fails to comply conscientiously with a request to submit data under paragraph (1). <Amended on Oct. 1, 2025> |
| Article 45 (Start date of mutual agreement procedure) |
The start date of the mutual agreement procedure shall be either of the following dates:
| 1. | Where the competent authority of the other Contracting State makes a request to commence the mutual agreement procedure: The date of notifying the competent authority of the other Contracting State of the intent to accept the request; |
| 2. | Where a request to commence the mutual agreement procedure is forwarded to the competent authority of the other Contracting State: The date of receiving the intent to accept the request from the competent authority of the other Contracting State. |
| Article 46 (End date of mutual agreement procedure) |
| (1) | The end date of the mutual agreement procedure shall be the date the competent authority of the Republic of Korea enters into a written agreement with the other Contracting State; provided, where no mutual agreement is reached, the end date of the mutual agreement procedure shall be the date five years elapse from the date following the start date. |
| (2) | Where the competent authorities of the Republic of Korea and the other Contracting State agree to continue the mutual agreement procedure, such procedure shall continue to be in force, notwithstanding the proviso of paragraph (1). In such cases, the end date of the mutual agreement procedure shall not exceed eight years from the date following the start date. |
| (3) | In any of the following cases, a date classified accordingly shall be the end date of the mutual agreement procedure, notwithstanding paragraphs (1) and (2); provided, subparagraph 1 shall not apply to cases prescribed by Presidential Decree, such as where a response to the tax adjustment by the other Contracting State is required: <Amended on Oct. 1, 2025> |
| 1. | Where the final ruling is made by a court in the course of the mutual agreement procedure: The date the final ruling is made; |
| 2. | Where the applicant withdraws his or her application for commencing the mutual agreement procedure in the course of such procedure: The date the application is withdrawn; |
| 3. | Where the Minister of Finance and Economy or the Commissioner of the National Tax Service terminates ex officio the mutual agreement procedure under Article 44(2): The date the applicant is notified of the termination of such procedure. |
| Article 47 (Enforcement of terms and conditions mutually agreed upon) |
| (1) | The Commissioner of the National Tax Service shall report the terms and conditions mutually agreed upon to the Minister of Finance and Economy at the end of the mutual agreement procedure. <Amended on Oct. 1, 2025> |
| (2) | After the end of the mutual agreement procedure, the Minister of Finance and Economy or the Commissioner of the National Tax Service shall notify the tax authority, the head of a local government, the Director of the Tax Tribunal, other relevant agencies, and the applicant, of the terms and conditions mutually agreed upon within 15 days from the date following the end date of the mutual agreement procedure. In such cases, the Minister of Finance and Economy shall immediately give public notice of the contents of the agreement under Article 42(1)1. <Amended on Oct. 1, 2025> |
| (3) | Where the Minister of Finance and Economy or the Commissioner of the National Tax Service has commenced the mutual agreement procedure and reaches an agreement in writing and all of the following requirements are met, he or she shall implement the agreement without delay: <Amended on Oct. 1, 2025> |
| 1. | Where the applicant accepts the terms and conditions mutually agreed upon; |
| 2. | Where the mutual agreement procedure and the appeal are proceeding at the same time, and the applicant withdraws the appeal against the terms and conditions mutually agreed upon. |
| (4) | The tax authority or the head of a local government shall assess taxes, determine to make a rectification, or take other necessary action under the tax laws pursuant to the terms and conditions mutually agreed upon. |
| Article 48 (Extended application of terms and conditions mutually agreed upon) |
| (1) | An applicant may file an application with the tax authority or the head of a local government for applying the terms and conditions mutually agreed upon to transactions between the applicant and a foreign related party in a country other than the country bound by the mutual agreement, within three years from the date the notice of the end of the mutual agreement procedure is delivered pursuant to Article 47(2), as prescribed by Presidential Decree. |
| (2) | Where the application under paragraph (1) meets all of the following requirements, the tax authority or the head of the relevant local government may apply the terms and conditions mutually agreed upon to the transactions with a foreign related party in a country other than the country bound by the mutual agreement: |
| 1. | The transactions are of the same type as that upon which the terms and conditions were mutually agreed; |
| 2. | Taxes have been imposed in the same manner as stipulated in the terms and conditions mutually agreed upon; |
| 3. | Other requirements prescribed by Presidential Decree are met. |
| (3) | Article 47 shall apply mutatis mutandis to the extended application of the terms and conditions mutually agreed upon to a foreign related party in a country other than the country bound by the mutual agreement, as provided in paragraphs (1) and (2). |
| Article 49 (Special cases on application of extension of deadline for payment) |
| (1) | An applicant may file an application with the head of a tax office having jurisdiction over the place for tax payment or the head of a local government, for special application of extension of the payment deadline, etc. under Article 13 of the National Tax Collection Act (including the deferment of collection under Article 25 of the Local Tax Collection Act; hereafter in this Article referred to as "extension of the payment deadline, etc.") or suspension of attachment or sale under Article 105 of the National Tax Collection Act (including the deferment of collecting delinquent local taxes under Article 105 of the Local Tax Collection Act; hereafter in this Article referred to as "suspension of attachment or sale"), as prescribed by Presidential Decree. |
| (2) | Where the mutual agreement procedure has commenced before a notice of the amount of tax payable is given, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government in receipt of an application under paragraph (1) may defer payment notice under Article 14 of the National Tax Collection Act (including the deferment of notice and the notice to make payments in installments under Article 25 of the Local Tax Collection Act; hereafter in this Article referred to as "deferment of payment notice") until the end date of the mutual agreement procedure. In such cases, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government shall notify the amount of tax payable within 30 days from the date following the end date of the mutual agreement procedure. |
| (3) | Where the mutual agreement procedure has commenced after the notice of tax payment or a demand notice was served on the taxpayer, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government in receipt of application under paragraph (1) may either extend the payment deadline, etc. or defer the seizure or the sale from the start date to the end date of the mutual agreement procedure. In such cases, the head of the tax office having jurisdiction over the place for tax payment or the head of the local government shall set a new payment deadline and collect the tax amount with the extended payment deadline or the deferred tax amount, within 30 days from the date following the end date of the mutual agreement procedure. |
| (4) | Paragraphs (2) and (3) shall apply only where the other Contracting State allows the extension of the payment deadline, etc. or the deferment of the seizure or the sale, in the course of the mutual agreement procedure. |
| (5) | Where the head of the tax office having jurisdiction over the place for tax payment or the head of the local government allows the extension of the payment deadline, etc. or the deferment of the seizure or the sale pursuant to paragraph (3), he or she shall additionally collect the amount equivalent to the interest for the relevant period as calculated as prescribed by Presidential Decree. |
| (6) | Where any of the deferred notice of payment, the extension of the payment deadline, etc., or the deferment of the seizure or the sale (hereafter in this paragraph referred to as "deferred notice, etc.") is applied to the amount of income tax or corporate tax under paragraph (2) or (3), the deferred notice, etc. shall also be applied, as it stands, to the amount of local tax to be added to the amount of income tax or corporate tax without undergoing any separate procedure provided in this Article. In such cases, the Commissioner of the National Tax Service shall notify the head of the relevant local government of the deferred notice, etc., as prescribed by Presidential Decree. |
| Article 50 (Special cases on application of period of appeal and period of decision on appeal) |
Where the mutual agreement procedure commences, the period from the start date to the end date of such procedure shall not be counted in the following periods: <Amended on Dec. 31, 2022>
| 1. | Period of request under Article 56(3), 61, or 68 of the Framework Act on National Taxes or Article 91 of the Framework Act on Local Taxes; |
| 2. | Period of decision under Article 65 or 80-2 of the Framework Act on National Taxes or Article 96 of the Framework Act on Local Taxes. |
| Article 51 (Special cases regarding statute of limitations period for tax assessment) |
| (1) | Where the mutual agreement procedure commences, no national taxes shall be assessed after the expiration of the period coming later between the following periods: |
| 1. | The one-year period beginning on the date following the end date of the mutual agreement procedure; |
| 2. | The statute of limitations period for tax assessment under Article 26-2(1) through (4) of the Framework Act on National Taxes. |
| (2) | Where the mutual agreement procedure commences, no local taxes shall be assessed after the expiration of the period coming later between the following periods: |
| 1. | The one-year period beginning on the date following the end date of the mutual agreement procedure; |
| 2. | The statute of limitations period for tax assessment under Article 38(1) of the Framework Act on Local Taxes. |
| Article 51-2 (Consultative body for implementation of mutual agreement procedure) |
If it is necessary to consult on the following matters, the Minister of Finance and Economy may organize and operate a consultative body jointly with the competent authority of the other Contracting State: <Amended on Oct. 1, 2025>
| 1. | Matters concerning the smooth implementation of the mutual agreement procedure; |
| 2. | Matters concerning the notification of major amendments to the tax statutes of the Republic of Korea and the other Contracting State; |
| 3. | Other matters concerning the implementation of a tax treaty and tax cooperation between the Republic of Korea and the other Contracting State. |
[This Article Added on Dec. 31, 2023]
CHAPTER IV REPORTING ON FOREIGN ASSETS AND SUBMISSION OF DATA
SECTION 1 Reporting on Foreign Financial Accounts
The terms used in this Chapter are defined as follows: <Amended on Jul. 18, 2023>
| 1. | The term "foreign financial company, etc." means the following entities located in a foreign country and prescribed by Presidential Decree, which include a domestic corporation’s places of business in foreign countries but exclude a foreign corporation’s places of business in the Republic of Korea: |
| a. | A financial company that engages in the finance and insurance business and similar types of business; |
| b. | A virtual asset service provider defined in subparagraph 2 of Article 2 of the Act on the Protection of Virtual Asset Users and any similar business entity; |
| 2. | The term "foreign financial account" means any of the following accounts opened with a foreign financial company, etc. for financial transactions with a foreign financial company, etc. (including financial transactions defined in subparagraph 3 of Article 2 of the Act on Real Name Financial Transactions and Confidentiality and similar transactions) and for virtual asset transactions (including virtual asset transactions defined in subparagraph 2d of Article 2 of the Act on Reporting and Using Specified Financial Transaction Information and similar transactions): |
| a. | An account opened in connection with banking services pursuant to Article 27 of the Banking Act; |
| b. | An account opened for trading securities defined in Article 4 of the Financial Investment Services and Capital Markets Act and similar foreign securities; |
| c. | An account opened for trading derivatives defined in Article 5 of the Financial Investment Services and Capital Markets Act and similar foreign derivatives; |
| d. | An account opened with a virtual asset service provider defined in subparagraph 2 of Article 2 of the Act on the Protection of Virtual Asset Users or any other similar business entity in a foreign country for the transactions of virtual assets defined in subparagraph 1 of Article 2 of that Act and similar assets; |
| e. | An account, other than those prescribed in items a through d, which is opened with a foreign financial company, etc. for other financial transactions or virtual asset transactions; |
| 3. | The term "foreign financial account information" means the following: |
| a. | Information on the identity of the account holder, such as the name and address; |
| b. | Information on the account held, such as the account number, the name of the foreign financial company, etc., and the largest balance of the account as at the end of each month; |
| c. | Information on persons related to foreign financial accounts referred to in Article 53(2). |
| Article 53 (Reporting on foreign financial accounts) |
| (1) | A resident or domestic corporation holding a foreign financial account, the balance of which (or the aggregate balance of all foreign financial accounts, if the resident or domestic corporation holds more than one account) as at the last day of any month of the relevant year exceeds the amount prescribed by Presidential Decree (hereinafter referred to as "person required to report his or her account"), shall report the foreign financial account information to the head of a tax office having jurisdiction over the place for tax payment from June 1 to 30 of the following year. |
| (2) | For the purposes of applying paragraph (1), each of the following persons (hereafter in this Chapter referred to as "person related to a foreign financial account") shall be deemed to hold the relevant foreign financial account: |
| 1. | Where the actual holder of a foreign financial account is different from the nominal account holder, such as an account not under a real name: The nominal holder and the actual holder; |
| 2. | Where a foreign financial account is an account in joint names: Each joint holder. |
| (3) | Matters necessary for reporting foreign financial accounts under paragraphs (1) and (2), such as standards for determining persons required to report their accounts, methods of computing the balance of foreign financial accounts, methods of reporting, and standards for determining actual holders, shall be prescribed by Presidential Decree. |
| Article 54 (Exemption from obligation to report foreign financial accounts) |
A person required to report his or her account shall be exempt from the obligation to report under Article 53 in any of the following cases: <Amended on Dec. 31, 2023; Dec. 31, 2024>
| 1. | A person falls under any of the following: |
| a. | A foreign resident under the proviso of Article 3(1) of the Income Tax Act; |
| b. | A Korean national residing abroad defined in subparagraph 1 of Article 2 of the Act on the Immigration and Legal Status of Overseas Koreans, who has residence in the Republic of Korea for not more than 182 days in total, counting from one year before the end of the year for which the relevant report is to be filed. In such cases, the period of residence in the Republic of Korea shall be calculated by the method prescribed by Presidential Decree; |
| c. | A person prescribed by Presidential Decree from among those working for an international institution prescribed by Presidential Decree: |
| 2. | Any of the following institutions: |
| a. | The State, a local government, or a public institution provided in the Act on the Management of Public Institutions; |
| b. | An Institution established through all types of international agreements governed by international laws, such as treaties, conventions, agreements, and memorandums concluded between the Republic of Korea and other countries; |
| 3. | A financial company, etc.; |
| 4. | A person related to a foreign financial account who meets the requirements prescribed by Presidential Decree, including where his or her foreign financial account information is verifiable through a report by another joint holder, etc. of the account; |
| 5. | An institution prescribed by Presidential Decree, which is subject to management and supervision by the State under other statutes or regulations; |
| 6. | A person who submits information on the overseas financial accounts together when submitting the details of overseas trust under Article 58(3); |
| 7. | A person recognized as a resident of the other contracting State under a tax treaty. |
| Article 55 (Revised and overdue reports of foreign financial accounts) |
| (1) | A person who has reported his or her foreign financial account information by the reporting deadline prescribed in Article 53(1) but has under-reported the amount thereof, may file a revised report on such information before the tax authority imposes an administrative fine under Article 90(1). <Amended on Dec. 31, 2022> |
| (2) | A person who has failed to report his or her foreign financial account information by the reporting deadline prescribed in Article 53(1) may report such information before the tax authority imposes an administrative fine under Article 90(1). <Amended on Dec. 31, 2022> |
| (3) | Methods of filing revised or overdue reports on foreign financial accounts pursuant to paragraphs (1) and (2) and other necessary matters shall be prescribed by Presidential Decree. |
| Article 56 (Explanation about source of noncompliance amounts in relation to obligation to report foreign financial accounts) |
| (1) | Where a person required to report his or her account under Article 53(1) fails to report the relevant foreign financial account information by the reporting deadline or has under-reported the relevant amount, the relevant tax authority may request the person to explain the source of the amount that remains unreported by the reporting deadline or has been under-reported (hereinafter referred to as "noncompliance amount"). |
| (2) | Upon receipt of a request for explanation under paragraph (1), the person required to report his or her account shall give an explanation in a manner prescribed by Presidential Decree within 90 days from the date of receiving such request (hereafter in this paragraph referred to as "period for explanation"); provided, where the person requests an extension of the period for explanation on account of unavoidable circumstances prescribed by Presidential Decree, such as where collecting and preparing data requires considerable time, the tax authority may extend the period for explanation by up to 60 days only once. |
| (3) | Paragraphs (1) and (2) shall not apply where a person required to report his or her account files a revised or overdue report pursuant to Article 55; provided, paragraphs (1) and (2) shall apply where the person files such report, knowing beforehand the intent of the tax authority to impose an administrative fine. |
| Article 57 (Confidentiality of foreign financial account information) |
| (1) | No tax official shall offer or divulge any foreign financial account information to any third person or misappropriate such information; provided, a tax official may provide foreign financial account information within the limits of the purposes in the circumstances provided in any subparagraph of Article 81-13(1) of the Framework Act on National Taxes. |
| (2) | No person who has become aware of foreign financial account information under paragraph (1) shall provide or divulge such information to any third person or misappropriate it. |
SECTION 2 Submission of Data on Overseas Subsidiaries
| Article 58 (Obligation to submit data on overseas subsidiaries) |
| (1) | A resident (excluding a foreign resident under the proviso of Article 3(1) of the Income Tax Act; hereafter in this Section, the same shall apply) or a domestic corporation that makes an overseas direct investment under Article 3(1)18 of the Foreign Exchange Transactions Act (hereafter in this paragraph referred to as "overseas direct investment") shall submit the following data (hereinafter referred to as "statement, etc. of an overseas direct investment") to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under the Income Tax Act or within six months from the end of the month in which the end date of the business year under the Corporate Tax Act falls, as prescribed by Presidential Decree. This shall also apply where the stocks or investment shares of a foreign corporation which has attracted an overseas direct investment are transferred during the taxable period under the Income Tax Act or the business year under the Corporate Tax Act or where a foreign corporation which has attracted an overseas direct investment is liquidated and such investment is no longer valid: <Amended on Dec. 21, 2021; Dec. 31, 2022> |
| 1. | A statement of overseas direct investments; |
| 2. | The financial position of the foreign corporation that has attracted overseas direct investments (including the financial position of other foreign corporations in which the foreign corporation that has attracted overseas direct investments has made investments); |
| 3. | Losses on transactions of the resident or domestic corporation that has made overseas direct investments (limited to the loss on transactions with the foreign corporation that has attracted overseas direct investments); |
| 4. | Losses on transactions of the foreign corporation that has attracted overseas direct investments (excluding the loss on transactions with the domestic corporation that has made overseas direct investments); |
| 5. | Current status of establishment of overseas business offices; |
| 6. | Other data prescribed by Presidential Decree in relation to overseas direct investments; |
| 7. | Deleted. <Dec. 21, 2021> |
| (2) | Where a resident or a domestic corporation that acquires and owns or disposes of real estate in a foreign country or any right in relation to such real estate (hereinafter referred to as "overseas real estate, etc.") through a capital transaction defined in Article 3(1)19 of the Foreign Exchange Transactions Act falls under any of the following cases, he, she, or it shall submit the following data (hereinafter referred to as "statement of overseas real estate, etc.") to the head of a tax office having jurisdiction over the place for tax payment within the taxable period under the Income Tax Act or within six months from the end of the month in which the end date of the fiscal year under the Corporate Tax Act falls, as prescribed by Presidential Decree: <Added on Dec. 21, 2021> |
| 1. | Where the acquisition value of overseas real estate, etc. is at least 200 million won: The statement of the acquisition, investment operations (including a lease), and disposal of overseas real estate, etc., and the current status of holding overseas real estate, etc. as of the taxable period or the end date of the fiscal year; |
| 2. | Where the acquisition value of overseas real estate, etc. is less than 200 million won but the disposal value thereof is at least 200 million won: The statement of the disposal of overseas real estate, etc. |
| (3) | A resident or a domestic corporation (hereafter in this Article and Article 91 referred to as "trustee") who creates (including cases where property is transferred to an overseas trust; hereinafter the same shall apply) a trust similar to a trust provided in the Trust Act (hereinafter referred to as "overseas trust"), among trusts under foreign statutes or regulations, shall submit a detailed statement of overseas trust (referring to the details of overseas trust, the value of overseas trust property, and other details related to the creation of overseas trust; hereinafter the same shall apply) classified as follows to the head of a tax office having jurisdiction over the place for tax payment, as prescribed by Presidential Decree, within six months from the end of the taxable period under Article 5 of the Income Tax Act or the month in which the end of the fiscal year under Article 6 of the Corporate Tax Act falls. <Added on Dec. 31, 2023> |
| 1. | In cases of overseas trust that meets the requirements prescribed by Presidential Decree, such as the truster's substantial control of the overseas trust property: Details of overseas trust for the taxable period under Article 5 of the Income Tax Act or for the fiscal year under Article 6 of the Corporate Tax Act in which the period from the date of establishment of the overseas trust to the end date of the overseas trust falls; |
| 2. | In cases of overseas trust, other than the overseas trust referred to in subparagraph 1: Details of overseas trust for the taxable period under Article 5 of the Income Tax Act or for the fiscal year under Article 6 of the Corporate Tax Act, in which the date of establishment of overseas trust falls; |
| (4) | If several trusters are required to submit the details of overseas trust pursuant to paragraph (3), each truster shall submit the details of overseas trust, respectively; provided, where the head of the competent tax office having jurisdiction over the place for tax payment confirms that some of the trusters have submitted the details of overseas trust, the other trusters shall be exempted from the obligation to submit the details of overseas trust. <Added on Dec. 31, 2023> |
| (5) | Where a resident or domestic corporation fails to submit a statement of overseas direct investment, etc., a statement of overseas real estate, etc., or a statement of overseas trust (hereinafter referred to as "statement of overseas local corporations, etc.") or submits a false statement of overseas corporations, etc., the tax authority may request the resident or domestic corporation to submit or supplement the statement of overseas corporations, etc. <Amended on Dec. 31, 2024> |
| (6) | A person upon receipt of a request to submit or supplement data under paragraph (5) shall submit the relevant data within 60 days from the date of receiving such request. <Amended on Dec. 21, 2021; Dec. 31, 2023; Dec. 31, 2024> |
| (7) | For the purposes of applying paragraph (2), an acquisition value and a disposal value shall be computed as specified in the following subparagraphs; In such cases, the conversion of a foreign currency into the Korean won is calculated by applying a basic exchange rate or an arbitrage exchange rate under the Foreign Exchange Transactions Act as at the day of receiving or paying the foreign currency: <Amended on Dec. 21, 2021; Dec. 31, 2023> |
| 1. | Acquisition value: The amount classified as follows: |
| a. | Residents: Acquisition value under Article 118-4(1)1 of the Income Tax Act; |
| b. | Domestic corporations: An acquisition value under Article 41 of the Corporate Tax Act; |
| 2. | Disposal value: Transfer value under Article 118-3 of the Income Tax Act. |
| (8) | In applying paragraph (3), the value of overseas trust property shall be based on the market price classified in the following subparagraphs, reflecting the current status of the country in which the overseas trust property is located, and matters concerning the calculation of such market price shall be prescribed by Presidential Decree; provided, if it is impracticable to calculate the market price, the value of overseas trust property shall be determined by the method prescribed by Presidential Decree, such as based on the acquisition value of the relevant property: <Added on Dec. 31, 2023> |
| 1. | In cases falling under paragraph (3)1: The market price classified as follows: |
| a. | Where the overseas trust is maintained: The market price as at the end of the taxable period under Article 5 of the Income Tax Act or of the fiscal year under Article 6 of the Corporate Tax Act; |
| b. | Where the overseas trust is terminated: The market price as at the date the overseas trust is terminated; |
| 2. | In cases falling under paragraph (3)2: The market price as at the date of establishment of an overseas trust. |
| Article 59 (Explanation about source of funds for acquisition in cases of noncompliance with obligation to submit data on overseas subsidiaries) |
| (1) | If a resident or domestic corporation who has acquired the stocks or investment shares of a foreign corporation that has attracted an overseas direct investment, or who has acquired any overseas real estate, etc. or who has established overseas trust, within 10 years before the date of requesting the explanation, falls under any of the following cases, the tax authority may request such resident or domestic corporation to explain the source of the following funds (excluding the funds reported pursuant to Article 18 of the Foreign Exchange Transactions Act; hereinafter referred as "amount subject to explanation about the source of acquisition funds"): <Amended on Dec. 21, 2021; Dec. 31, 2022; Dec. 31, 2023> |
| 1. | Where a resident or domestic corporation that has made an overseas direct investment under Article 3(1)18a of the Foreign Exchange Transactions Act directly or indirectly owns at least 10 percent of the total number of issued stocks or the total amount of investment of a corporation that has attracted an overseas direct investment and such resident or domestic corporation fails to submit the data prescribed in Article 58(1)1 within the deadline specified in the former part, with the exception of the subparagraphs, of Article 58(1) or submits false data: The amount paid to acquire the stocks or investment shares of a foreign corporation that has attracted an overseas direct investment under Article 3(1)18a of the Foreign Exchange Transactions Act; |
| 2. | Where a resident or domestic corporation fails to submit data prescribed in subparagraph 1 or 2 of Article 58(2) by the deadline specified in the provisions, with the exception of the subparagraphs, of Article 58(2) or submits false data: The amount paid to acquire overseas real estate, etc.; |
| 3. | Where a person fails to submit the details of overseas trust by the deadline specified in the provisions, with the exception of the subparagraphs, of Article 58(3), or submits false data: The amount incurred in acquiring the overseas trust property. |
| (2) | A resident or domestic corporation requested to give an explanation under paragraph (1) shall give an explanation in a manner prescribed by Presidential Decree within 90 days (hereafter in this Article referred to as "period for explanation") from the date of receiving the notice for explanation. In such cases, if the resident or domestic corporation requested to give an explanation explains the source of at least 80 percent of the amount requested to be explained, the source of the whole amount requested shall be deemed explained. |
| (3) | Notwithstanding paragraph (2), where a resident or domestic corporation requests an extension of the period for explanation on account of unavoidable circumstances prescribed by Presidential Decree, such as where collecting and preparing data requires considerable time, the tax authority may extend the period for explanation up to 60 days only once. |
CHAPTER V IMPOSITION OF GLOBAL ANTI-BASE EROSION TAX
SECTION 1 Common Provisions
| Article 60 (Purpose of global anti-base erosion tax) |
The purpose of this Chapter is to prescribe matters necessary to apply the internationally agreed Global Anti-Base Erosion (GloBE) Rules that are established to respond to tax avoidance and base erosion by multinational enterprise groups through profit shifting, thereby ensuring that multinational enterprise groups pay an appropriate level of tax on their income.
[This Article Added on Dec. 31, 2022]
[Previous Article 60 moved to Article 87 <Dec. 31, 2022>]
| (1) | The terms used in this Chapter are defined as follows: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| 1. | The term "entity" means the following: |
| a. | Any legal person; provided, the State and local governments shall be excluded herefrom; |
| b. | An arrangement that has separate financial accounts, such as a partnership or trust; |
| 2. | The term "group" means the following: |
| a. | A collection of entities prescribed by Presidential Decree that are related through ownership or control; |
| b. | An enterprise (excluding an enterprise that has only the permanent establishment specified in subparagraph 3d) that is not included in a group specified in item a and has one or more permanent establishments located in a country other than the countries (including a region that has fiscal autonomy, and the region shall be deemed a separate country; hereafter in this Chapter, the same shall apply) where the relevant enterprise is located; |
| 3. | The term "permanent establishment" means a fixed place of business that performs all or part of business and falls under the following: |
| a. | An establishment which is recognized to have a fixed place of business under an applicable and effective tax treaty (including a tax treaty to which the Republic of Korea is not a Contracting Party; hereafter the same shall apply in this Chapter), and on which the country where the place of business is located imposes tax on the income attributable to the relevant place of business by the method of calculating business income under the Model Tax Convention on Income and Capital adopted by the Organization for Economic Cooperation and Development or by similar methods; |
| b. | A place of business without any applicable and effective tax treaty, and on which the country where the place of business is located imposes taxes on the net income attributable to the relevant place of business in a manner similar to the method of taxation on residents as provided for in the tax laws of the country where the place of business is located; |
| c. | A place of business located in a country without a corporate tax system, which is recognized as having a fixed place of business in the relevant country according to a standard tax treaty, over which the relevant country where the place of business is located may impose tax on the income attributable to the relevant place of business according to the method of calculating business income under the standard tax treaty; |
| d. | A place of business other than the places of business prescribed in items a through c, through which an entity conducts its business through that place of business in a country other than the country where the place of business is located, and the country where the enterprise is located does not impose tax on the income attributable to the relevant place of business. |
| 4. | The term "multinational enterprise group (MNE Group)" means any group that includes at least one entity or permanent establishment that is not located in the countries of the ultimate parent entity; |
| 5. | The term "parent entity" means an ultimate parent entity, an intermediate parent entity, or a partially-owned parent entity, which is not an excluded entity under Article 62(3); |
| 6. | The term "ultimate parent entity (UPE)" means the following: |
| a. | An entity that satisfies all of the following requirements: |
1) The entity owns directly or indirectly a controlling interest in any other entity;
2) The entity that is not owned, with a controlling interest, directly or indirectly by another entity;
| b. | Group headquarters specified in subparagraph 2b; |
| 7. | The term "intermediate parent entity" means a constituent entity which directly or indirectly holds an ownership interest in another constituent entity of the same MNE Group, and which is a constituent entity other than a UPE, permanent establishment, partially-owned parent entity, or investment constituent entity; |
| 8. | The term "partially-owned parent entity" means a constituent entity which directly or indirectly holds an ownership interest in another constituent entity of the same MNE Group, for which more than 20/100 of profits out of its ownership interests is held directly or indirectly by persons who do not belong to the MNE Group, and which is an constituent entity other than a UPE, permanent establishment, or investment constituent entity; |
| 9. | The term "constituent entity" means an enterprise included in a MNE Group and a permanent establishment that has such enterprise as the head office (referring to an entity that includes the financial accounting net income or loss of the permanent establishment in its financial statements; hereafter in this Chapter, the same shall apply). In such cases, each permanent establishment shall be deemed separate from the head office and any other permanent establishment of that head office; |
| 10. | The term "ownership interest" means a share or equity interest that carries rights to the profits, capital, or reserves of an entity (including the profits, capital, or reserves of the head office's permanent establishments) or rights to interests similar thereto. In such cases, the head office shall be deemed to have all of the ownership interests in its permanent establishments; |
| 11. | The term "controlling interest" means an ownership interest in an entity that the interest holder (excluding government entities prescribed by Presidential Decree among government entities referred to in Article 62(3)1) is required to consolidate in accordance with the financial accounting standards, etc. as prescribed by Presidential Decree. In such case, the head office shall be deemed to have the controlling interests of its permanent establishments; |
| 12. | The term "consolidated financial statements" means financial statements that include consolidated financial statements defined in subparagraph 3 of Article 2 of the Act on External Audit of Stock Companies and financial statements similar thereto and that are prescribed by Presidential Decree, such as those where an entity and the entities in which it has a controlling interest, if any, are consolidated; |
| 13. | The term "financial accounting net income or loss" means the net income or loss determined for a constituent entity (before any consolidation adjustments eliminating intra-group transactions) in preparing consolidated financial statements of the UPE; |
| 14. | The term "filing constituent entity" means an entity that files a GloBE information return in accordance with Article 83 (where a constituent entity located in a foreign country files a GloBE information return with the tax authority of the foreign country, referring to the constituent entity); |
| 15. | The term "constituent entity-owner" means a constituent entity that directly or indirectly owns an ownership interest in another constituent entity of the same MNE Group; |
| 16. | The term "minority-owned constituent entity" means a constituent entity of the same MNE Group where the UPE has a direct or indirect ownership interest in such entity of not more than 30/100; |
| 17. | The term "low-taxed constituent entity" means a constituent entity that is located in a country where an effective tax rate determined under Article 69 or 73-5 is lower than the minimum rate (referring to 15/100; hereafter in this Chapter, the same shall apply); |
| 18. | The term "investment constituent entity" means a constituent entity prescribed by Presidential Decree, such as investment fund and real estate investment vehicle. |
| (2) | Terms that are not otherwise defined in paragraph (1) and other provisions of this Chapter but defined in the International Financial Reporting Standards shall have the meanings prescribed in the International Financial Reporting Standards. |
[This Article Added on Dec. 31, 2022]
[Previous Article 61 moved to Article 89 <Dec. 31, 2022>]
| Article 62 (Entities subject to application of this chapter) |
| (1) | This Chapter shall apply to constituent entities that are members of a MNE Group in the relevant business year, if the revenues on the consolidated financial statements of the UPE of a MNE Group in at least 2 business years out of 4 business years immediately preceding each business year (referring to the fiscal year subject to consolidated financial statements prepared by UPE of MNE Group; hereafter in this Chapter, the same shall apply), which has reflected the adjustments prescribed by Presidential Decree, such as addition of profits accrued from ordinary business activities, which are separately indicated in the consolidated financial statements of UPE (hereafter in this Chapter referred to as "consolidated revenues") are at least EUR 750 million. In such cases, if the business years is not 12 months, the consolidated revenues shall be adjusted proportionally to correspond to a 12-month business year. <Amended on Dec. 31, 2024> |
| (2) | Where there arises any reason prescribed by Presidential Decree, including a merger or demerger, the methods of applying paragraph (1) and the exchange rate to convert a consolidated revenue or any other amount necessary for the application of this Chapter into Euro currency shall be prescribed by Presidential Decree. |
| (3) | This Chapter shall not apply to the following institutions, etc. (hereafter in this Chapter referred to as "excluded entities") as they are not deemed constituent entities: <Amended on Dec. 31, 2023> |
| 1. | A governmental entity; |
| 2. | An international organization; |
| 3. | A non-profit organization; |
| 5. | An Investment fund that is a UPE; |
| 6. | A real estate investment vehicle that is a UPE; |
| 7. | Any other entity prescribed by Presidential Decree, where an institution, etc. prescribed in subparagraphs 1 through 6 directly or indirectly own the value of its ownership interests (referring to the total value of all types of ownership interests issued by an entity). |
| (4) | Notwithstanding paragraph (3), this Chapter may apply to excluded entities under paragraph (3)7, by deeming it as a constituent entity out of choice by a filing constituent entity. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (5) | Matters necessary for the specific scope of an excluded entity under paragraph (3) and the election of a filing constituent entity under paragraph (4), etc. shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
[Previous Article 62 moved to Article 90 <Dec. 31, 2022>]
A constituent entity that is in the same MNE Group and located in the Republic of Korea (hereinafter referred to as "local constituent entity") shall be obligated to pay the tax amounts specified in the following subparagraphs (hereinafter referred to as the "top-up tax amounts, etc.") as corporate income tax:
| 1. | The top-up tax amount allocated to the domestic constituent entity that is the parent entity in accordance with Article 72; |
| 2. | The top-up tax amount allocated to a local constituent entity in accordance with Article 73; |
| 3. | The domestic top-up tax allocated to a domestic constituent entity pursuant to Article 73-7. |
[This Article Wholly Amended on Dec. 23, 2025]
| Article 64 (Locations of entities) |
| (1) | For the purpose of applying this Chapter, the country in which an entity is located (hereafter in this Chapter referred to as "country of residence") shall be classified as follows: <Amended on Dec. 31, 2023> |
| 1. | In the case of an entity whose incomes, etc. are deemed attributable to its owner, and which is not an entity prescribed by Presidential Decree (hereafter in this Chapter referred to as "flow-through entity"): The countries classified as follows: |
| a. | In the case of the entity liable to pay a tax in a country based on its place of management, place of creation, or similar criteria (excluding where an entity is liable to pay a tax in a country only on the income sourced in such country): That country; |
| b. | In the case of an entity other than that specified in item a: The country where the entity is established and registered under its statutes or regulations; |
| 2. | In the case of an entity which is a flow-through entity and the UPE of a MNE Group or which is a constituent entity required to apply the qualified income inclusion rule prescribed in Article 72(4)1: The country where the entity is established and registered under its statutes or regulations. |
| (2) | In the case of a flow-through entity, other than that specified in paragraph (1)2, no country of residence shall be deemed to exist. |
| (3) | The country of residence of a permanent establishment shall be prescribed by Presidential Decree, taking into account whether a tax treaty is applicable, the details of the tax treaty, and other matters. <Amended on Dec. 31, 2023> |
| (4) | Except as provided in paragraphs (1) through (3), matters necessary concerning the country of residence of an entity, such as determining the country of residence if at least two countries of residence exist, shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 65 (Places for tax payment by entities) |
`Articles 9 through 12 of the Corporate Tax Act shall apply mutatis mutandis to places for tax payment by local constituent entities, the designation and change thereof, and other matters.
[This Article Added on Dec. 31, 2022]
SECTION 2 Calculation and Imposition of Top-Up Tax
Subsection 1 Calculation of Top-Up Tax
| Article 66 (Calculation of global anti-base erosion income or loss) |
| (1) | The GloBE income or loss of a constituent entity for each fiscal year (referring to the income or loss of a constituent entity for calculating an effective tax rate under Article 69, and if the income or loss is a positive amount, the amount shall be referred to as "GloBE income" but if it is the nil or negative amount, the amount as "GloBE loss"; hereafter in this Chapter, the same shall apply) shall be calculated by reflecting the adjustments prescribed by Presidential Decree, such as addition of net taxes expenses to, exclusion of dividends from, and addition of policy disallowed expenses including bribes to, the financial accounting net income or loss for the relevant fiscal year. |
| (2) | Where it is impracticable to determine the financial accounting net income or loss of a constituent entity specified in paragraph (1) based on the accounting standards used in preparing the consolidated financial statements of the UPE (hereafter in this Chapter referred to as "accounting standards of the UPE") and where the requirements prescribed by Presidential Decree are satisfied, the financial accounting net income or loss of the constituent entity may be determined using the accounting standards prescribed by Presidential Decree other than that of the UPE. |
| (3) | Any international shipping income or loss prescribed by Presidential Decree, such as the income obtained from the transportation of passengers or cargo by ships operated in international traffic that is included in the financial accounting net income or loss of a constituent entity, and any qualified ancillary international shipping income or loss prescribed by Presidential Decree that arises from the activities performed in connection with the transportation of passengers or cargo by ships in international traffic, which are included in the financial accounting net income or loss of a constituent entity, shall be excluded from the computation of the GloBE income or loss of the constituent entity. |
| (4) | The financial accounting net income or loss of a permanent establishment that is a constituent entity shall be calculated, as prescribed by Presidential Decree, by reflecting whether the permanent establishment does not have separate financial accounts, the income and expense that are attributable to the permanent establishment, and other matters. |
| (5) | The financial accounting net income or loss of a permanent establishment calculated under paragraph (4) shall not be included in the calculation of the GloBE income or loss of the head office of the relevant permanent establishment; provided, it shall be included in the calculation of the minimum GloBE income or loss of the head office of the relevant permanent establishment in cases prescribed by Presidential Decree, such as where the deficit of the permanent establishment is included in deductible expenses in the calculation of domestic taxable income of the head office of the permanent establishment. <Amended on Dec. 31, 2023> |
| (6) | The financial accounting net income or loss of a flow-through entity that is a constituent entity shall be allocated to a permanent establishment through which its business is conducted, a constituent entity-owner, or any other constituent entity, as prescribed by Presidential Decree, and the financial accounting net income or loss of the flow-through entity shall be reduced by the amount allocated. |
| (7) | Except as provided in paragraphs (1) through (6), matters necessary to calculate any GloBE income or loss and financial accounting net income or loss, and other matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 67 (Calculation of adjusted covered taxes) |
| (1) | The adjusted covered taxes of a constituent entity for each fiscal year shall be calculated by reflecting the total deferred tax adjustment amount and other adjustments prescribed by Presidential Decree in the amount recorded as the current tax expense in the financial accounts of the constituent entity for the fiscal year, among the taxes imposed on the income or profits of the constituent entity for the fiscal year and other taxes prescribed by Presidential Decree (hereafter in this Chapter referred to as "covered taxes"). In such cases, the covered taxes specified in the following subparagraphs shall be allocated, as prescribed by Presidential Decree, to other constituent entities and entities prescribed by Presidential Decree (hereafter in this Chapter referred to as "other constituent entities, etc."), taking into account the allocation of the relevant income and the ownership interests held by the constituent entity for the fiscal year: <Amended on Dec. 23, 2025> |
| 1. | Covered taxes attributable to the income of a permanent establishment; |
| 2. | Covered taxes attributable to dividend income, etc. received from other constituent entities, etc.; |
| 3. | Other covered taxes prescribed by Presidential Decree that are recognized as necessary to be allocated to other constituent entities, etc. |
| (2) | When any adjustment is reflected in covered taxes under paragraph (1), the total deferred tax adjustment amount of a constituent entity for each fiscal year shall be calculated by reflecting the adjustments prescribed by Presidential Decree, such as excluding the deferred tax expense with regard to the income or loss not included in the calculation of the GloBE income or loss from the calculation of the deferred tax expense in its financial accounts for the relevant fiscal year. In such cases, if the tax rate applicable to the calculation of the deferred tax expense in the financial accounts exceeds the minimum rate, a recalculation shall be made based on the minimum rate. |
| (3) | For purposes of applying paragraph (2), where a constituent entity fails to pay a tax related to its deferred tax liabilities reflected in the total deferred tax adjustment amount (excluding any amount prescribed by Presidential Decree, such as the amount of deferred tax liabilities changed in relation to depreciation of tangible assets) by the last day of the business year that is five years after the date the deferred tax liability was recorded, the relevant amount shall be deducted from the covered taxes for the business year in which the date of such recording falls as prescribed by Presidential Decree, and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for the relevant business year shall be recalculated. <Amended on Dec. 31, 2024> |
| (4) | Notwithstanding paragraph (1), when any adjustment is reflected in covered taxes under paragraph (1), the special cases on the handling of GloBE loss, in which the amount prescribed by Presidential Decree is deemed deferred tax assets without applying the total deferred tax adjustment amount according to the choice of a filing constituent entity (hereafter in this Chapter referred to as "special rules for loss treatment") may be applied to each country of location of a constituent entity (excluding a constituent entity subject to special cases on the eligible distribution tax system under Article 78). <Added on Dec. 31, 2024> |
| (5) | If a filing constituent entity intends to be subject to special rules for loss treatment, it shall select a country of residence of the constituent entity subject to special rules for loss treatment when submitting a GloBE information report on the first fiscal year governed by the GloBE Rules (referring to the GloBE Rules under this Chapter or other statutes or regulations of other countries equivalent thereto) under Article 83(1) (hereafter referred to as "first applicable year" in this Chapter), and submit the report to the country of residence. <Added on Dec. 31, 2024> |
| (6) | Where a filing constituent entity chooses whether to apply a special case on the handling of losses under paragraph (5), it shall comply with the following standards: <Added on Dec. 31, 2024> |
| 1. | The special rules for loss treatment shall continue to apply to the constituent entity of the country of location chosen by a filing constituent entity to be subject to special rules for loss treatment, in the first applicable year and the subsequent business years; |
| 2. | A filing constituent entity may revoke its selection with respect to a constituent entity in the country of location subject to the special rules for loss treatment under subparagraph 1; |
| 3. | If a filing constituent entity revokes its selection of the constituent entity in the country of location subject to the special rules for loss treatment under subparagraph 1, it shall not continue to choose the special rules for loss treatment for the business year and the following business years subject to the relevant revocation. |
| (7) | Except as otherwise provided for in paragraphs (1) through (6), matters necessary for the calculation of adjusted covered taxes and the total deferred tax adjustment amount, and the application of special rules for loss treatment, etc. shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2024> |
[This Article Added on Dec. 31, 2022]
| Article 68 (Post-filing adjustments and tax rate changes) |
| (1) | Where the amount of a constituent entity's covered taxes for a previous fiscal year recorded in its financial accounts increases or decreases in each fiscal year due to any determination, rectification, etc. after a GloBE information return is filed under Article 83(1), the increased or decreased amount shall be added to the covered taxes for the fiscal year in which the date any determination, rectification, etc. is made falls (hereafter in this Article referred to as "fiscal year for rectification") or shall be added to or deducted from the adjusted covered taxes for a previous fiscal year in which any determination, rectification, etc. is to be made (hereafter in this Article referred to as "fiscal year subject to rectification") in accordance with the following classification: |
| 1. | Where the amount of covered taxes for a fiscal year subject to rectification increases: The increased amount of covered taxes shall be added to the covered taxes for the fiscal year for rectification; |
| 2. | Where the amount of covered taxes for a fiscal year subject to rectification decreases: The decreased amount of covered taxes shall be deducted from the adjusted covered taxes for a fiscal year subject to rectification, and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for a fiscal year subject to rectification shall be recalculated, as prescribed by Presidential Decree. |
| (2) | Notwithstanding paragraph (1)2, where the amount of the decrease in covered taxes for a fiscal year subject to rectification is an immaterial amount prescribed by Presidential Decree, such decreased amount may be deducted from the covered taxes of a constituent entity for the fiscal year for rectification at the election of a filing constituent entity. |
| (3) | Where any change is made to the tax rate applicable to the calculation of a constituent entity’s deferred tax expense in the country of residence, covered taxes shall be adjusted, as prescribed by Presidential Decree. |
| (4) | Where a constituent entity fails to pay an amount exceeding EUR one million that is recorded in its financial accounts as its current tax expense and included in adjusted covered taxes for a previous fiscal year within three years from the last day of the previous fiscal year, the unpaid amount shall be deducted from adjusted covered taxes for the previous fiscal year and the effective tax rate under Article 69 and the top-up tax under Articles 70 and 71 for such year shall be recalculated. <Amended on Dec. 31, 2023> |
| (5) | Except as provided in paragraphs (1) through (4), matters necessary for adjustment of covered taxes, adjusted covered taxes, etc. after filing of a GloBE information return for a previous year pursuant to Article 83(1) shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 69 (Calculation of effective tax rates) |
| (1) | The effective tax rate of a MNE Group for each fiscal year shall be calculated by country. |
| (2) | The effective tax rate of a MNE Group by country shall be calculated by dividing the amount under subparagraph 1 by the amount under subparagraph 2: <Amended on Dec. 31, 2023> |
| 1. | The sum of the adjusted covered taxes specified in Article 67(1) of each constituent entity located in the relevant country; |
| 2. | The amount computed in accordance with the following formula (hereafter in this Chapter referred to as "net GloBE income"): |
┌─────────────────────────────────────────┐
│ Net global anti-base erosion income = A - B │
│ │
│ A: The sum of the global anti-base erosion income of each constituent entity located in the relevant country for the relevant business year │
│ B: The sum of the global anti-base erosion loss of each constituent entity located in the relevant country for the relevant business year with the negative sign removed │
└─────────────────────────────────────────┘
| (3) | Where the net GloBE income calculated under paragraph (2)1 is a negative amount, the effective tax rate calculated under the same paragraph shall be deemed zero. <Added on Dec. 31, 2023> |
| (4) | Any amount that is not included in the calculation of the effective tax rate deeming the effective tax rate as zero pursuant to paragraph (3) shall be added to the amount specified in paragraph (2)1 in accordance with the method prescribed by the Presidential Decree, when calculating the effective tax rate for the subsequent fiscal year. <Added on Dec. 31, 2023> |
| (5) | When the amount under paragraph (2)2 is the nil or negative amount, the effective tax rate shall not be calculated for the relevant country, deeming the net GloBE income does not exist. <Amended on Dec. 31, 2023> |
| (6) | For the purposes of applying paragraphs (1) through (5), a constituent entity prescribed by Presidential Decree, such as a flow-through entity that is deemed to have no country of residence under Article 64(2) (hereafter in this Chapter referred to as "stateless constituent entity"), shall be deemed a constituent entity located in a country that is separately assumed by each stateless constituent entity. <Amended on Dec. 31, 2023> |
| (7) | When the effective tax rate is calculated under paragraphs (1) through (6), the GloBE income or loss prescribed in Article 66(1) of a minority-owned constituent entity or a constituent entity that is located in the relevant country and its adjusted covered taxes under Article 67(1) shall be excluded when calculating the sum of the net GloBE incomes or the adjusted covered taxes for the relevant country. <Amended on Dec. 31, 2023> |
[This Article Added on Dec. 31, 2022]
| Article 70 (Calculation of top-up taxes for countries of residence of constituent entities) |
| (1) | The top-up tax for each fiscal year for the country in which a constituent entity of the relevant MNE Group is located shall be computed in accordance with the following formula: |
┌──────────────────────────────────────────┐
│ The country where the constituent entity of the MNE Group is located = (A × B) + C － D │
│ of the relevant multinational enterprise group is located │
│ │
│ A: The top-up tax percentage for the country in which a constituent entity of the relevant multinational enterprise group is located │
│ B: The excess profit for the country in which a constituent entity of the relevant multinational enterprise group is located │
│ C: The additional current top-up tax for the country in which a constituent entity of the relevant multinational enterprise group is located │
│ D: The qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant multinational enterprise group is located │
└──────────────────────────────────────────┘
| (2) | "Top-up tax percentage for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the percentage calculated by deducting the effective tax rate prescribed in Article 69 from the minimum rate, and if the result of such calculation is negative amount, the top-up tax percentage shall be deemed zero. |
| (3) | "Excess profit for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the amount calculated by deducting from the net GloBE income the sum of the excluded amounts related to payroll costs and the book value of tangible assets prescribed by Presidential Decree for constituent entities located in the relevant country (hereafter in this Chapter referred to as "substance-based income exclusion"); and if the result of such calculation is negative, the excess profit shall be deemed to be zero. <Amended on Dec. 31, 2023> |
| (4) | "Additional current top-up tax for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means the amount that is added to the top-up tax for the relevant fiscal year as prescribed by Presidential Decree, such as the amount added to the top-up tax accrued when recalculating the effective tax rate under Article 69 for the previous fiscal year. <Amended on Dec. 31, 2023> |
| (5) | "Qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant MNE Group is located" in the formula specified in paragraph (1) means any tax that the country of residence imposes to reduce the top-up tax to zero and that has been paid or is to be paid under the qualified domestic minimum top-up tax system of the relevant country prescribed by Presidential Decree, and the top-up tax for the relevant fiscal year shall be deemed nil in any of the following cases. <Amended on Dec. 31, 2023> |
| 1. | Where the top-up tax of the relevant country is nil or negative as a result of deducting the qualified domestic minimum top-up tax for the country in which a constituent entity of the relevant MNE Group is located; |
| 2. | Where the qualified domestic minimum top-up tax system for the country in which a constituent entity of the relevant MNE Group is located satisfies the requirements prescribed by Presidential Decree, such as the accounting requirements for deeming the top-up tax for the relevant fiscal year as nil. |
| (6) | Except as provided in paragraphs (1) through (5), matters necessary to calculate the top-up tax for each fiscal year for the country in which a constituent entity of the relevant MNE Group is located shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 71 (Calculation of top-up taxes of constituent entities) |
The top-up tax of a constituent entity for each fiscal year shall be computed in accordance with the following formula. In such cases, matters necessary to apply such formula shall be prescribed by Presidential Decree: The top-up tax of a constituent entity = A x B/C A: The top-up tax for each business year for the country in which a constituent entity of the relevant multinational enterprise group is located under Article 70 B: The global anti-base erosion income of the relevant constituent entity for each business year C: The sum of the global anti-base erosion income of each constituent entity located in the relevant country for each business year
[This Article Added on Dec. 31, 2022]
SECTION 2 Imposition of Top-Up Tax
| Article 72 (Application of income inclusion rule) |
| (1) | With respect to the top-up tax of a low-taxed constituent entity calculated under Article 71, the income inclusion rules shall preferentially apply, under which the allocable share of top-up tax (referring the top-up tax, if any, allocated to the parent entity or other constituent entities under paragraph (2) or Article 73(3) through (6); hereafter in this Chapter the same shall apply) is imposed on the parent entity (hereafter in this Chapter referred to as "IRR"). In such cases, the domestic constituent entity shall calculate and pay the allocable share of top-up tax in accordance with paragraphs (2) through (8). <Amended on Dec. 31, 2024> |
| (2) | A parent entity's allocable share of top-up tax of a low-taxed constituent entity for each fiscal year shall be computed in accordance with the following formula: |
┌──────────────────────────────────────┐
│ Parent entity's allocable share of top-up tax = A × B │
│ │
│ A: The top-up tax of a low-taxed constituent entity calculated under Article 71 │
│ B: The percentage of the global anti-base erosion income of a low-taxed constituent │
│ entity that is attributable to the relevant parent entity and prescribed by Presidential Decree │
└──────────────────────────────────────┘
| (3) | Where the UPE that is a local constituent entity directly or indirectly owns an ownership interest in a low-taxed constituent entity at any time during the relevant fiscal year, the UPE shall pay its allocable share of top-up tax. |
| (4) | Where an intermediate parent entity that is a local constituent entity directly or indirectly owns an ownership interest in a low-taxed constituent entity at any time during the relevant fiscal year (including an ownership interest in the low-taxed constituent entity owned by a permanent establishment of the intermediate parent entity), the intermediate parent entity shall pay its allocable share of top-up tax; provided, this shall not apply in the following cases: |
| 1. | Where the UPE of the MNE Group to which the low-taxed constituent entity belongs is required to apply a rule that, as the IIR, meets the requirements prescribed by Presidential Decree (hereafter in this Chapter referred to as a "Qualified IIR") for the relevant fiscal year; |
| 2. | Where another intermediate parent entity that directly or indirectly owns a controlling interest in the intermediate parent entity is required to apply a Qualified IIR for the relevant fiscal year. |
| (5) | Where a partially-owned parent entity that is a local constituent entity directly or indirectly owns an ownership interest in a low-taxed constituent entity at any time during the relevant business year, the partially-owned parent entity shall pay its allocable share of top-up tax. <Amended on Dec. 31, 2024> |
| (6) | Where a partially-owned parent entity, which shall be subject to the Qualified IIR for the relevant business year, directly or indirectly holds both ownership shares of another partially-owned parent entity, paragraph (5) shall not apply to the other partially-owned parent entity. <Amended on Dec. 31, 2024> |
| (7) | Paragraphs (3) through (6) shall not apply to a local low-taxed constituent entity. |
| (8) | Where a parent entity owns an ownership interest in a low-taxed constituent entity indirectly through an intermediate parent entity or a partially-owned parent entity that is subject to the qualified IIR, its allocable share of top-up tax shall be calculated by deducting from the allocable share of top-up tax calculated under paragraph (2), an amount prescribed by Presidential Decree by taking into account the allocable share of top-up tax paid by the intermediate parent entity or partially-owned parent entity. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
[This Article Added on Dec. 31, 2022]
| Article 73 (Application of under taxed payment rule) |
| (1) | The Under-taxed Profits Rule in which the allocable share of top-up tax is imposed on the constituent entity of MNE Group (hereafter referred to as the "UTPR" in this Chapter) shall apply to the tax amount not governed by the Qualified IIR, among the top-up tax of a low-taxed constituent entity. In such cases, the domestic constituent entity shall calculate and pay the allocable share of top-up tax in accordance with paragraphs (2) through (7). <Amended on Dec. 31, 2024> |
| (2) | The UTPR top-up tax amount of a MNE Group for each fiscal year shall be the sum of the top-up tax of all low-taxed constituent entities. |
| (3) | The top-up tax of a low-taxed constituent entity under paragraph (2) shall be the amount classified as follows: |
| 1. | Where all of the UPE's ownership interests in the low-taxed constituent entity are held directly or indirectly by one or more parent entities that are required to apply a Qualified IIR with respect to such low-taxed constituent entity for the relevant fiscal year: Zero; |
| 2. | Where subparagraph 1 does not apply: The amount calculated by deducting the parent entity's allocable share of top-up tax of the relevant low-taxed constituent entity that is imposed under a Qualified IIR. |
| (4) | The domestically allocable share of UTPR top-up-tax of a MNE Group for each business year shall be calculated by multiplying the UTPR top-up tax estimated under paragraphs (2) and (3) by the UTPR domestic allocation ratio calculated in accordance with the following formula. In such cases, matters necessary to apply the following formula shall be prescribed by Presidential Decree: <Amended on Dec, 31, 2023> |
┌─────────────────────────────────────────┐
│ The under taxed payment rule = (A/B x 50/100) + (C/D x 50/100) │
│ percentage of the Republic of Korea │
│ B 100 D 100 │
│ │
│ A: The total number of employees of each local constituent entity of the relevant multinational enterprise group │
│ B: The total number of employees of all the constituent entities of the relevant MNE Group │
│ located in a country implementing the UTPR satisfying the requirements prescribed by │
│ Presidential Decree (hereafter referred to as the "Qualified UTPR" in this Chapter ) │
│ C: The sum of the net book values of tangible assets of all the local constituent entities of the relevant MNE Group │
│ D: The sum of the net book values of tangible assets of all the constituent entities of │
│ the relevant MNE Group located in a country implementing the Qualified UTPR │
└─────────────────────────────────────────┘
| (5) | Where the domestic UTPR top-up tax under paragraph (4) is distributed to each domestic constituent entity of MNE Group (excluding investment constituent entities; hereafter the same shall apply in this paragraph) for each business year, the UTPR top-up tax shall be calculated by applying a method selected by the filing constituent entity among the following methods; provided, if all or part of the UTPR top-up tax is not paid, which is calculated by applying the method under subparagraph 2 by the end of the business year immediately preceding the business year in which the domestic UTPR top-up tax under paragraph (4) is allocated, the domestic UTPR top-up tax under paragraph (4) shall be calculated by applying the method of allocation to UPE that is a domestic constituent entity, and if the relevant UPE is not located within the country, the method under subparagraph 1 shall apply in calculation: <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| 1. | A method of allocation by taking into account the proportion of ownership interests in the local constituent entities held directly or indirectly by the UPE of a MNE Group to which the local constituent entity belongs, and the ability of each local constituent entity governed by the Qualified UTPR to bear additional tax allocations, a method prescribed by Presidential Decree; |
| 2. | A method of apportionment to at least one local constituent entity designated by the filing constituent entity, as agreed upon by all local constituent entities of the MNE Group. |
| (6) | Notwithstanding paragraph (4), in cases where a constituent entity of a MNE Group located in a country implementing the Qualified UTPR fails to appropriate all or part of UTPR top-up tax distributed in the business year preceding each business year as current tax expense accrued in its financial accounting, the domestic allocation ratio of the UTPR top-up tax of a MNE Group in the relevant business year for the relevant country shall be deemed zero. In such cases, the total number of employees and the sum of net book value of tangible assets of the relevant MNE Group located in the relevant country shall also be deemed zero, respectively. <Added on Dec. 31, 2023; Dec. 31, 2024> |
| (7) | A local constituent entity of a MNE Group shall pay the UTPR top-up tax computed in accordance with paragraph (5). <Amended on Dec. 31, 2023> |
[This Article Added on Dec. 31, 2022]
SECTION 3 Calculation and Imposition of Domestic Top-Up Tax
Subsection 1 Calculation of Domestic Top-Up Tax
| Article 73-2 (Calculation of GloBE income or loss for calculation of domestic top-up tax) |
‘ Article 66 shall apply mutatis mutandis to the calculation of GloBE income or loss for calculating the domestic top-up tax under Article 73-6.
[This Article Added on Dec. 23, 2025]
| Article 73-3 (Calculation of adjusted covered taxes for calculating domestic top-up tax) |
| (1) | Article 67 (1) through (3) shall apply mutatis mutandis to the calculation of the adjusted covered taxes for calculating the domestic top-up tax under Article 73-6. In such cases, the "effective tax rate under Article 69 and the top-up tax under Articles 70 and 71" shall be deemed to refer to the "effective tax rate under Article 73-5 and the domestic top-up tax under Article 73-6." |
| (2) | Notwithstanding Article 67 (1) as applied mutatis mutandis pursuant to paragraph (1), when reflecting adjustments in covered taxes under that paragraph, the special rules for loss treatment may be applied at the election of the filing constituent entity. |
| (3) | Where a filing constituent entity intends to apply the special rule for loss treatment pursuant to paragraph (2), it shall select whether to apply the special rule for loss treatment and submit such selection when submitting the GloBE information return for the first applicable year. |
| (4) | Where a filing constituent entity selects whether to apply the special rule for loss treatment pursuant to paragraph (3), the following criteria shall apply: |
| 1. | Where a filing constituent entity elects to apply the special rule for loss treatment, such special rule shall be applied continuously to domestic constituent entities for the first applicable year and subsequent fiscal years; |
| 2. | Where a filing constituent entity elects to apply the special rule for loss treatment pursuant to subparagraph 1, it may revoke such election with respect to domestic constituent entities; |
| 3. | Where a filing constituent entity revokes the election to apply the special rule for loss treatment with respect to domestic constituent entities under subparagraph 1, it shall not elect to apply the special rule for loss treatment continuously for the fiscal year to which such revocation applies and for subsequent fiscal years. |
| (5) | Notwithstanding the latter part of Article 67(1) as applied mutatis mutandis pursuant to the former part of paragraph (1), where adjusted covered taxes are calculated for the purpose of calculating the domestic top-up tax under Article 73-6, such calculation shall be made by reflecting matters prescribed by Presidential Decree, including the exclusion of covered taxes allocated from other constituent entities, etc. located in foreign jurisdictions. |
| (6) | Except as provided for in paragraphs (1) through (5), matters necessary for the calculation of adjusted covered taxes and the total deferred tax adjustment amount for calculating the domestic top-up tax, and for the application of the special rule for loss treatment, shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 23, 2025]
| Article 73-4 (Post-filing adjustments and changes in tax rates for calculating domestic top-up tax) |
| (1) | Article 68 (1) through (4) shall apply mutatis mutandis to post-filing adjustments and changes in tax rates for calculating the domestic top-up tax under Article 73-6. In such cases, the "effective tax rate under Article 69 and the top-up tax under Articles 70 and 71" shall be deemed to refer to the "effective tax rate under Article 73-5 and the domestic top-up tax under Article 73-6." |
| (2) | Except as provided in paragraph (1), matters necessary to adjust covered taxes, adjusted covered taxes, etc. for calculating the domestic top-up tax after a GloBE information return for a previous year is filed under Article 83(1) and other matters shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 23, 2025]
| Article 73-5 (Calculation of effective tax rate for calculating domestic top-up tax) |
| (1) | The effective tax rate for calculating the domestic top-up tax under Article 73-6 shall be calculated by dividing the amount specified in subparagraph 1 by the amount specified in subparagraph 2: |
| 1. | The total amount of the adjusted covered taxes under Article 73-3 of each domestic constituent entity; |
| 2. | The net GloBE income amount of domestic constituent entities. |
| (2) | Where the amount under paragraph (1)1 is negative, the effective tax rate calculated under that paragraph shall be deemed to be zero. |
| (3) | Any amount that is not included in the calculation of the effective tax rate deeming the effective tax rate as zero pursuant to paragraph (2) shall be added to the amount specified in paragraph (1)1 in accordance with the method prescribed by the Presidential Decree, when calculating the effective tax rate for the subsequent fiscal year. |
| (4) | When the amount under paragraph (1)2 is the nil or negative amount, the effective tax rate shall not be calculated for the relevant MNE Group, deeming the net GloBE income does not exist. |
| (5) | In applying paragraphs (1) through (4), a constituent entity that is a flow-through entity deemed not to have a country of residence pursuant to Article 64(2) and that is established or registered in the Republic of Korea under the statutes and regulations of the Republic of Korea, and a permanent establishment prescribed by Presidential Decree, shall be deemed to be located in the Republic of Korea. |
| (6) | In calculating the effective tax rate pursuant to paragraphs (1) through (5), the GloBE income or loss under Article 66 as applied mutatis mutandis pursuant to Article 73-2 and the adjusted covered taxes under Article 73-3 of a domestic minority-owned constituent entity or an investment constituent entity shall be excluded when calculating the aggregate of net GloBE incomes and adjusted covered taxes of the relevant MNE Group. |
[This Article Added on Dec. 23, 2025]
| Article 73-6 (Calculation of domestic top-up tax) |
| (1) | The domestic top-up tax of MNE Group for each fiscal year shall be the amount calculated in accordance with the following formula: |
┌─────────────────────────────┐
│ Domestic top-up tax of the MNE Group = (A × B) + C │
│ │
│ A: Domestic top-up tax rate of the MNE Group │
│ B: Amount of domestic excess profits of the MNE Group │
│ C: The current domestic top-up tax amount of the MNE Group │
└─────────────────────────────┘
| (2) | In the formula under paragraph (1), the term "domestic top-up tax rate of the relevant MNE Group" means the rate calculated by subtracting the effective tax rate under Article 73-5 from the minimum tax rate, and where the result of such calculation is negative, the domestic top-up tax rate shall be deemed to be zero. |
| (3) | In the formula under paragraph (1), the term "domestic excess profit amount of the relevant MNE Group" means the amount obtained by subtracting the substance-based income exclusion amount of its domestic constituent entities from the net GloBE income amount; and where the result of such calculation is negative, the domestic excess profit amount shall be deemed to be zero. |
| (4) | In the formula under paragraph (1), the term "current domestic top-up tax addition amount of the relevant MNE Group" means the amount to be added to the domestic top-up tax for the fiscal year as prescribed by Presidential Decree, including an additional amount of domestic top-up tax arising where the effective tax rate under Article 73-5 for a previous fiscal year is recalculated. |
| (5) | A constituent entity and a permanent establishment deemed to be located in the Republic of Korea pursuant to Article 73-5(5) shall be treated as a domestic constituent entity belonging to a separate MNE Group, and the domestic top-up tax shall be calculated for each individual constituent entity and permanent establishment. |
[This Article Added on Dec. 23, 2025]
SECTION 2 Imposition of Domestic Top-Up Tax
| Article 73-7 (Imposition of domestic top-up tax) |
| (1) | A domestic low-taxed constituent entity shall pay the amount obtained by allocating the domestic top-up tax calculated pursuant to Articles 73-6 and 79 to the relevant domestic constituent entities under paragraph (2) (hereafter in this Chapter referred to as the "allocable share of the domestic top-up tax"). |
| (2) | The domestic top-up tax shall be allocated according to the method chosen by the filing constituent entity among the following methods: |
| 1. | A method prescribed by Presidential Decree that allocates the domestic top-up tax by taking into account each domestic constituent entity's contribution to, and ability to bear, the domestic top-up tax; |
| 2. | A method of allocating the domestic top-up tax (where two or more domestic top-up taxes are calculated for the relevant MNE Group for each fiscal year, referring to the aggregate of such domestic top-up taxes) to one or more domestic constituent entities designated by the filing constituent entity, where all domestic constituent entities of the relevant MNE Group agree to such allocation. |
| (3) | Notwithstanding paragraph (2), where all or part of the allocable share of the domestic top-up tax calculated by applying the method under paragraph (2)2 has not been paid by the end of the fiscal year immediately preceding the fiscal year in which the domestic top-up tax is allocated, the domestic top-up tax under Articles 73-6 and 79 shall be allocated to the UPE that is a domestic constituent entity; provided, where the UPE is not located in the Republic of Korea, it shall be allocated in accordance with the method under paragraph (2)1. |
[This Article Added on Dec. 23, 2025]
| Article 74 (Special cases concerning de minimis exclusion) |
| (1) | Notwithstanding Articles 69 through 71 and 73-2 through 73-7, a filing constituent entity may reduce top-up tax, domestic top-up tax, and allocable share of domestic top-up tax for each constituent entity located in a country meeting all of the following requirements to zero for each business year, as prescribed by Presidential Decree: <Amended on Dec. 31, 2024; Dec. 23, 2025> |
| 1. | The average total sales prescribed by Presidential Decree for the relevant business year and the immediately preceding 2 business years of each constituent entity located in the relevant country shall be less than 10 million euros; |
| 2. | The average of the sum of GloBE income and loss prescribed by Presidential Decree for the relevant business year and the 2 immediately preceding business years of each constituent entity located in the relevant country shall be less than 1 million euros. |
| (2) | Paragraph (1) shall not apply to the following constituent entities: <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| 1. | A stateless constituent entity or investment constituent entity; |
| 2. | Each constituent entity located in the country which satisfied the requirements under each subparagraph of paragraph (1) when a filing constituent entity submitted a GloBE Information Return under Article 83(1), but no longer satisfies the requirements under each subparagraph of paragraph (1) for reasons prescribed by Presidential Decree, such as post-filing adjustments under Article 68; |
| 3. | Each constituent entity located in the country which did not satisfy the requirements under each subparagraph of paragraph (1) when a filing constituent entity submitted a GloBE Information Return under Article 83(1), but becomes to satisfy the requirements under each subparagraph of paragraph (1) for reasons prescribed by Presidential Decree, such as post-filing adjustments under Article 68. |
[This Article Added on Dec. 31, 2022]
| Article 75 (Special cases concerning minority-owned constituent entities) |
| (1) | With regard to a group prescribed by Presidential Decree that consists of minority-owned constituent entities (hereafter in this Chapter referred to as "minority-owned subgroup"), the effective tax rate, top-up tax, domestic top-up tax, and allocable share of domestic top-up tax shall be calculated in accordance with Articles 66 through 71, 73-2 through 73-7, and 76, 77, 78 through 81 as such minority-owned subgroup is deemed a separate MNE Group. <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| (2) | The effective tax rate, top-up tax, domestic top-up tax, and the allocable share of domestic top-up tax of a minority-owned constituent entity that is not a member of a minority-owned subgroup shall be calculated for each minority-owned constituent entity in accordance with Articles 66 through 71, 73-2 through 73-7, 76, 77, 78, 80, and 81. <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| (3) | Article 79 shall apply where the minority equity constituent entities not belonging to the minority-owned subgroup are the investment entities. <Amended on Dec. 31, 2023> |
| (4) | The adjusted covered taxes and GloBE income or loss of a minority-owned subgroup and a minority-owned constituent entity subject to the application of paragraph (2) shall be excluded when calculating the net GloBE income and the effective tax rate specified in Articles 69 and 73-5 of a different constituent entity of the same MNE Group. <Amended on Dec. 23, 2025> |
[This Article Added on Dec. 31, 2022]
| Article 76 (Special cases concerning reorganization) |
| (1) | Where an entity becomes or ceases to be a constituent entity of a MNE Group as a result of a transfer of direct or indirect ownership interests in such entity (hereafter in this paragraph referred to as "target entity"), this Chapter shall apply, as prescribed by Presidential Decree, taking into account whether the entity is included in the consolidated financial statements of the UPE of the MNE Group, the consolidated amount, and other matters; provided, in cases prescribed by Presidential Decree, such as where the country of residence of the target entity imposes taxes on a transfer of the relevant ownership interests in the same or similar manner as a transfer of assets and liabilities, paragraph (2) or (3) shall apply. |
| (2) | The GloBE income or loss of a constituent entity that disposes of assets and liabilities (hereafter in this Article referred to as "disposing constituent entity") and of a constituent entity that acquires assets and liabilities (hereafter in this Article referred to as "acquiring constituent entity) shall be calculated in accordance with the following classification: |
| 1. | A disposing constituent entity: Any gain or loss on disposition of assets and liabilities (hereafter in this Article referred to as "gain or loss on the disposition") shall be included in the computation of its GloBE income or loss; |
| 2. | An acquiring constituent entity: Its GloBE income or loss after the acquisition shall be calculated using the values of the acquired assets and liabilities determined under the accounting standard used in preparing consolidated financial statements. |
| (3) | Notwithstanding paragraph (2), where assets and liabilities are disposed of or acquired as part of a reorganization meeting the requirements prescribed by Presidential Decree, such as that the consideration for transferring assets and liabilities shall be shares or equity interests, the GloBE income or loss shall be calculated in accordance with the following classification. In such cases, if a disposing constituent entity recognizes part of any loss or gain arising in connection with a reorganization, as prescribed by Presidential Decree, such loss or gain shall be included in the calculation of its GloBE income or loss, as prescribed by Presidential Decree: |
| 1. | A disposing constituent entity: Any gain or loss on the disposition shall be excluded from the calculation of its global-anti-base erosion income or loss; |
| 2. | An acquiring constituent entity: Its GloBE income or loss after the acquisition shall be calculated using the disposing entity's carrying value of the acquired assets and liabilities upon disposition. |
| (4) | Notwithstanding paragraphs (1) through (3), in cases where the tax law of the country where a constituent entity is located stipulates that the book value of assets and liabilities (excluding ordinary assets and liabilities, including inventory assets) be adjusted or may be adjusted to a fair value, the GloBE income and loss may be calculated by the method prescribed by Presidential Decree, according to the choice of the constituent entity. <Added on Dec. 31, 2023; Dec. 31, 2024> |
[This Article Added on Dec. 31, 2022]
| Article 77 (Special cases concerning joint ventures) |
| (1) | With regard to an entity prescribed by Presidential Decree, in which the UPE of a MNE Group directly or indirectly owns at least 50/100 of ownership interests and for which the UPE uses the equity method to account for investments in an entity that holds at least 50/100 of the ownership interests when preparing its consolidated financial statement (hereafter in this Chapter referred to as "joint venture"), and a subsidiary of the joint venture prescribed by Presidential Decree (hereafter in this Chapter referred to as "joint venture subsidiary"), this Chapter shall apply in accordance with the following: <Amended on Dec. 31, 2024; Dec. 23, 2025> |
| 1. | Articles 66 through 71, 73-2 through 73-7, 74 through 76, paragraph (2) of this Article, Articles 77-2, and 78 through 81 shall apply as the joint venture and a joint venture subsidiary are deemed constituent entities of a separate MNE Group and the joint venture is deemed the UPE of such MNE Group; |
| 2. | Articles 72 and 73 shall apply to a parent entity that directly or indirectly holds ownership interests in the joint venture or a joint venture subsidiary, as prescribed by Presidential Decree. |
| (2) | This Chapter shall apply to at least two groups that meet all of the following requirements and to entities of each relevant group, as prescribed by Presidential Decree, as such groups and entities are deemed a single MNE Group and constituent entities thereof, respectively: |
| 1. | Any of the following arrangements shall be entered into by ultimate parent entities of separate groups: |
| a. | An arrangement prescribed by Presidential Decree, under which one of the ultimate parent entities prepares one consolidated financial statement in which all the entities of the separate groups are combined with each other (hereafter in this Article referred to as "stapled structure"); |
| b. | An arrangement prescribed by Presidential Decree, under which the business of the separate groups is combined by contract (hereafter in this Article referred to as "dual-listed arrangement"); |
| 2. | Any entity or permanent establishment of the combined group under a stapled structure or dual-listed arrangement shall be located in a different country with respect to the location of at least one other entity of such combined group. |
| (3) | Deleted. <Dec. 31, 2023> |
| (4) | Deleted. <Dec. 31, 2023> |
[This Article Added on Dec. 31, 2022]
| Article 77-2 (Special cases concerning dividend tax credit) |
| (1) | The GloBE income of each constituent entity specified in the following subparagraphs for each business year shall be calculated by deducting dividends prescribed by Presidential Decree that are distributed within 12 months from the end of the relevant business year, and if the amount remaining after such deduction is a negative figure, it shall be deemed zero: <Amended on Dec. 31, 2024> |
| 1. | The UPE of a MNE Group that is subject to the system prescribed by Presidential Decree that deducts dividends from the taxable income of dividend payers (hereafter referred to as "dividend deduction system" in this paragraph); |
| 2. | A constituent entity that satisfies all of the following requirements: |
| a. | It shall be a constituent entity subject to the dividend deduction system; |
| b. | The UPE of a MNE Group subject to the dividend deduction system shall directly hold shares of the relevant constituent entity (limited to a constituent entity located in a country where the relevant UPE is located; hereafter the same shall apply in this item) or indirectly hold shares through one or more constituent entities subject to the dividend deduction system. |
| (2) | Where the UPE of a MNE Group is a flow-through entity, the GloBE income and loss of such flow-through entity for each fiscal year shall be calculated by deducting the following relevant amounts: |
| 1. | GloBE income for each fiscal year: The amount of GloBE income attributable to ownership interests prescribed by Presidential Decree, such as the amount of GloBE income that is attributable to each ownership interest in the flow-through entity and subject to taxation at the minimum or higher rate; |
| 2. | GloBE loss for each fiscal year: Where the holder of each ownership interest in the relevant flow-through entity to which the GloBE loss amount is attributable can deduct the GloBE loss amount in calculating the taxable income, the relevant amount. |
| (3) | The GloBE income and loss for each business year in the fixed place of business (including a permanent establishment of a constituent entity the shares of which is directly held by the UPE of a MNE Group or indirectly held through a flow-through entity under the former part, with the exception of the calculation formula, of Article 79(1); hereafter the same shall apply in this paragraph) of the UPE of a MNE Group (limited to a flow-through entity; hereafter the same shall apply in this paragraph) shall be calculated by subtracting the following amounts: <Added on Dec. 31, 2024> |
| 1. | GloBE income for each business year: The amount of GloBE income attributable to ownership interests prescribed by Presidential Decree, such as the GloBE income amount that is attributable to each ownership interest in the relevant permanent establishment, which is subject to taxation at the minimum tax rate or above; |
| 2. | GloBE loss for each business year: Where the holder of each ownership interest in the relevant permanent establishment to which the GloBE loss amount is attributable may deduct the GloBE loss amount in calculating the taxable income, the relevant amount. |
| (4) | Matters necessary for the covered tax adjustment, etc. of the constituent entity subject to the deduction of GloBE income under paragraphs (1) through (3) shall be prescribed by Presidential Decree. <Added on Dec. 31, 2024> |
[This Article Added on Dec. 31, 2023]
| Article 78 (Special cases concerning eligible distribution tax systems) |
| (1) | With respect to a constituent entity subject to an eligible distribution tax system (referring to a tax system prescribed by Presidential Decree that imposes a corporate tax when a corporation distributes its profits), a filing constituent entity may elect to add the amount prescribed by Presidential Decree, such as the amount necessary to increase the effective tax rate to the minimum rate (hereafter in this Chapter referred to as the "amount of deemed distribution tax"), when calculating the sum of the adjusted covered taxes for the country in which the constituent entity is located. |
| (2) | With respect to a constituent entity for which the amount of deemed distribution tax is added under paragraph (1), in cases prescribed by Presidential Decree, such as where an amount equivalent to that of deemed distribution tax added is not actually imposed, the effective tax rate and top-up tax for the relevant fiscal year in which the amount of deemed distribution tax is added shall be recalculated, as prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 79 (Special cases concerning investment entities) |
| (1) | With respect to the country of residence of a constituent entity that is not UPE (excluding a tax transparent entity (referring to an entity fulfilling the requirements prescribed by Presidential Decree, such as that the income attributable to the ownership interest in a flow-through entity is subject to taxation in the country where a person who directly or indirectly holds the ownership interest is located; hereinafter the same shall apply in this Article); hereinafter the same shall apply in this Article), the effective tax rate for investment constituent entities for each business year shall be calculated separately from the effective tax rate specified in Articles 69 and 73-5 in accordance with the following formula; In such cases, matters necessary to apply the following formula shall be prescribed by Presidential Decree: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
┌────────────────────────────────────────┐
│ The effective tax rate for investment entities located in the relevant country = A │
│ ──────│
│ (B - C) │
│ │
│ A: The sum of the adjusted covered taxes of each investment constituent entity │
│ B: The sum of the allocable share of each investment constituent entity's global anti-base erosion income │
│ C: The sum of the allocable share of each investment constituent entity's global anti-base erosion loss with the negative sign removed │
└────────────────────────────────────────┘
| (2) | Where the value obtained by deducting C from B is the nil or negative amount for the relevant fiscal year in applying the formula prescribed in paragraph (1), the effective tax rate for investment entities located in the relevant country shall not be calculated. |
| (3) | The top-up tax and domestic top-up tax of investment entities located in the relevant country for each fiscal year shall be calculated as specified in the following subparagraphs; in such cases, matters necessary to apply the formula specified in the following subparagraphs shall be prescribed by Presidential Decree: <Amended on Dec. 23, 2025> |
| 1. | Top-up tax of investment entities located in the relevant country: To be calculated in accordance with the following formula: |
┌───────────────────────────────────────┐
│ The top-up tax of investment entities located in the relevant country = (A x B) + C - D │
│ │
│ A: The top-up tax percentage for investment entities located in the relevant country │
│ B: The excess profit of investment entities located in the relevant country │
│ C: The additional current top-up tax of investment entities located in the relevant country │
│ D: The qualified domestic minimum top-up tax of investment entities located in the relevant country │
└───────────────────────────────────────┘
| 2. | Domestic top-up tax of investment entities located in the country: To be calculated in accordance with the following formula: |
┌─────────────────────────────────────────────┐
│ The top-up tax of investment entities located in the the Republic of Korea = (A x B) + C │
│ │
│ A: Domestic top-up tax rate for investment entities located in the Republic of Korea │
│ B: Domestic excess profit of investment entities located in the Republic of Korea │
│ C: The current domestic top-up tax of investment entities located in the Republic of Korea │
└─────────────────────────────────────────────┘
| (4) | The top-up tax of the relevant investment constituent entity for each fiscal year shall be calculated in accordance with the following formula: |
┌──────────────────────────────────────┐
│ The top-up tax of the relevant investment constituent entity = A × B │
│ ───── │
│ C │
│ │
│ A: The top-up tax of investment entities located in the relevant country prescribed in paragraph (3) │
│ B: The allocable share of the relevant investment constituent entity's global anti-base erosion income │
│ C: The sum of the allocable share of the global anti-base erosion income of each investment constituent entity located in the relevant country │
└──────────────────────────────────────┘
| (5) | Notwithstanding paragraphs (1) through (4), in cases prescribed by Presidential Decree, such as where the constituent entity-owner of an investment constituent entity is subject to taxation based on the fair value of its ownership interest in the relevant investment constituent entity, this Chapter may apply, deeming the investment constituent entity as a tax transparent entity at the election of a filing constituent entity. <Amended on Dec. 31, 2023> |
| (6) | Notwithstanding paragraphs (1) through (4), in cases prescribed by Presidential Decree, such as where it is reasonably expected that the allocable shares of the constituent entity-owner of an investment constituent entity (excluding an investment constituent entity; hereinafter the same shall apply in this paragraph) will be taxed at the minimum tax rate or above, the following methods may apply as prescribed by Presidential Decree, according to the choice of the filing constituent entity: <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| 1. | An amount prescribed by Presidential Decree, such as the amount of the investment constituent entity's GloBE income that is distributed to the constituent-entity owner, shall be included in the calculation of the constituent entity-owner's GloBE income; |
| 2. | Where, as of the end of a fiscal year, there exists an amount prescribed by Presidential Decree, including any amount of the GloBE income of an investment constituent entity for the third fiscal year preceding the beginning of the relevant fiscal year that remains undistributed, such investment constituent entity shall be treated as a low-taxed constituent entity, and the amount calculated in accordance with the method prescribed by Presidential Decree, including by multiplying the minimum tax rate by the amount attributable to shareholder constituent entities among such amount, shall be deemed to be top-up tax and domestic top-up tax of such investment constituent entity, and Articles 72, 73, and 73-7 shall apply. |
[This Article Added on Dec. 31, 2022]
| Article 80 (Exemption from application) |
| (1) | Notwithstanding Article 70(1) and Article 73-6, with respect to a country that satisfies the exemption requirements prescribed by Presidential Decree in a transitional fiscal year prescribed by Presidential Decree (hereafter referred to as a "transitional fiscal year"), the top-up tax and the domestic top-up tax of such country for the transitional fiscal year may, at the election of the filing constituent entity, be deemed to be zero; provided, the foregoing shall not apply where the requirements prescribed by Presidential Decree are not substantiated, and in other cases prescribed by Presidential Decree. <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| (2) | Paragraph (1) shall apply to each of the following groups or entities located in the same country as the constituent entity, deeming it to be located in a country that is not the country of location of each constituent entity: <Added on Dec. 31, 2024> |
| 1. | Joint enterprise group (referring to joint enterprises and joint enterprise subsidiaries); |
| 2. | Joint enterprises not belonging to joint enterprise group. |
| (3) | Notwithstanding Article 70(1), with respect to the country where the UPE of which nominal tax rate of covered tax is at least 20/100 is located, the top-up tax of a low-taxed constituent entity located in the relevant country may be deemed zero, according to the option of the filing constituent entity, when calculating the UTPR top-up tax under Article 73(2) for each business year prescribed by Presidential Decree. <Added on Dec. 31, 2024; Dec. 23, 2025> |
| (4) | Notwithstanding Articles 70(1) and 73-6, a country that meets the requirements for exemption from application as prescribed by Presidential Decree, the top-up tax and domestic top-up tax for each business year may be deemed zero at the option of a filing constituent entity; provided, this shall not apply to cases prescribed by Presidential Decree, such as where any explanation of whether such requirements are satisfied is not given. <Added on Dec. 31, 2024; Dec. 23, 2025> |
[This Article Added on Dec. 31, 2022]
[Title Amended on Dec. 31, 2024]
| Article 81 (Special cases concerning transition year) |
| (1) | When a MNE Group calculates the effective tax rate for each country under Articles 69, 73-5, and 79, the total deferred tax adjustment amount of a MNE Group for the relevant country in the first applicable year and the following business years shall be calculated by including the deferred tax assets and deferred tax liabilities appropriated or publicly announced in the financial accounts of every constituent entity located in the relevant country on the commencement date of the first applicable year, notwithstanding Article 67(2) (including cases applied mutatis mutandis pursuant to Article 73-3(1)). <Amended on Dec. 31, 2023; Dec. 31, 2024; Dec. 23, 2025> |
| (2) | Matters necessary to calculate the effective tax rate for the first applicable year, such as the calculation of the total deferred tax adjustment amount under paragraph (1), shall be prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 82 (Special cases concerning MNE Groups in initial phase of their international activities) |
| (1) | Article 73 shall not apply to a MNE Group prescribed by Presidential Decree that is in the initial phase of its international activity for each fiscal year; provided, if the Republic of Korea is the country where the MNE Group has the highest total net book value of its tangible assets by country for the transition year, Article 73 shall apply in accordance with the following: <Amended on Dec. 31, 2023> |
| 1. | Where a low-taxed constituent entity is located in the Republic of Korea, its top-up tax shall be deemed zero for purposes of applying Article 73(2) and (3); |
| 2. | Where a low-taxed constituent entity is located in another country, the domestic distribution ratio of the UTPR shall be deemed one for the purposes of Article 73(4). |
| (2) | Paragraph (1) shall not apply starting from the fiscal year that commences after the day immediately following the day on which five years elapse after the first day of the fiscal year when a MNE Group is first subject to UTPR. <Amended on Dec. 31, 2023> |
[This Article Added on Dec. 31, 2022]
SECTION 5 Filing of Returns and Payment
| Article 83 (Filing of global anti-base erosion information returns) |
| (1) | A local constituent entity shall file a GloBE information return for each business year with the head of the tax office having jurisdiction over the place for tax payment by the date on which 15 months (18 months for the transition year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later, as prescribed by Presidential Decree. <Amended on Dec. 31, 2024> |
| (2) | A GloBE information return to be filed by a local constituent entity under paragraph (1) may be filed by an entity prescribed by Presidential Decree that is another local constituent entity of the same MNE Group (hereafter in this Chapter referred to as "designated local entity") on its behalf. |
| (3) | Notwithstanding paragraphs (1) and (2), a local constituent entity need not file a GloBE information return under paragraphs (1) and (2) in cases prescribed by Presidential Decree, such as where a constituent entity of the same MNE Group that is located in a foreign country files a return corresponding to a GloBE information return specified in paragraph (1) with the tax authority of the relevant country of residence. |
| (4) | Even where a local constituent entity does not file a GloBE information return under paragraph (3), the local constituent entity or a designated local entity shall file a return with the head of the tax office having jurisdiction over the place for tax payment on matters regarding a constituent entity located in a foreign country that files a return under paragraph (3) within by the date on which 15 months (18 months for the transition year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later. <Amended on Dec. 31, 2023; Dec. 31, 2024> |
| (5) | Where GloBE information returns or other documents submitted under paragraphs (1) and (2) are incomplete or any error is found therein, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office may request a correction thereof. |
[This Article Added on Dec. 31, 2022]
| Article 84 (Filing of returns on allocable share of top-up tax and payment thereof) |
| (1) | A local constituent entity obligated to pay the Republic of Korea the allocable share of top-up tax and others shall file a return on the allocable share of top-up tax and others with the head of the tax office having jurisdiction over the place for tax payment by the date on which 15 months (18 months for the first applicable year) elapse from the end date of the relevant business year or June 30, 2026, whichever is later, as prescribed by Presidential Decree. In such cases, the exchange rate used to convert the allocable share of top-up tax and others into won shall be prescribed by Presidential Decree. <Amended on Dec. 31, 2024; Dec. 23, 2025> |
| (2) | A local constituent entity obligated to pay the Republic of Korea the allocable share of top-up tax and others shall pay the relevant amount to the tax office having jurisdiction of the place for tax payment, the Bank of Korea (including its branch offices), or a postal office by the return deadline specified in paragraph (1), as prescribed by Presidential Decree. <Amended on Dec. 23, 2025> |
| (3) | Where the allocable share of top-up tax and others to be paid by a local constituent entity exceeds 10 million won, it may pay part of the relevant amount in installments within one month (two months in the case of a small or medium enterprise prescribed in Article 6(1) of the Act on Restriction on Special Cases concerning Taxation) after the payment deadline, as prescribed by Presidential Decree. <Amended on Dec. 23, 2025> |
| (4) | Where a return on any allocable share of top-up tax and others is filed under paragraph (1), a return on the tax base for and amount of a national tax shall be deemed filed for purposes of applying the Framework Act on National Taxes. <Amended on Dec. 23, 2025> |
| (5) | Articles 47-2 and 47-3 of the Framework Act on National Taxes shall not apply to a local constituent entity which is obliged to report and pay the allocable share of top-up tax and others for the fiscal year in the transition period to the Republic of Korea, and the additional tax for delayed payment on the allocable share of top-up tax and others to the relevant local constituent entity shall be the amount equivalent to 50/100 of the amount under Article 47-4(1) of that Act. <Added on Dec. 31, 2023; Dec. 23, 2025> |
[This Article Added on Dec. 31, 2022]
[Title Amended on Dec. 23, 2025]
| Article 85 (Determination, rectification, notification, and collection) |
| (1) | Where a local constituent entity fails to file a return under Article 84, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office shall determine its allocable share of top-up tax and others for each fiscal year. <Amended on Dec. 23, 2025> |
| (2) | Where any error or omission is found in the details of a return filed by a local constituent entity under Article 84, the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office shall rectify its allocable share of top-up tax and others. <Amended on Dec. 23, 2025> |
| (3) | Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies any allocable share of top-up tax and others under paragraphs (1) and (2), he or she shall do so based on books or other evidentiary documents. <Amended on Dec. 23, 2025> |
| (4) | Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies any allocable share of top-up tax and others under paragraphs (1) and (2) and then discovers any error or omission in the determination or rectification, he or she shall re-rectify the relevant allocable share of top-up tax and others immediately. <Amended on Dec. 23, 2025> |
| (5) | Where a local constituent entity is deemed likely to evade its allocable share of top-up tax and others during the relevant fiscal year on any ground prescribed by Presidential Decree (hereafter in this Article referred to as "ground for occasional imposition"), the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office may impose the allocable share of top-up tax and others on the entity on an occasional basis (hereinafter referred to as "occasional imposition"). In such cases, a local constituent entity obligated to pay its allocable share of top-up tax and others to the Republic of Korea shall file a return on the allocable share of top-up tax and others for each fiscal year under Article 84 even where it has paid the tax amount imposed occasionally. <Amended on Dec. 23, 2025> |
| (6) | For purposes of applying paragraph (5), the period from the date the relevant fiscal year commences to the date a ground for occasional imposition arises shall be the period of occasional imposition; provided, where a ground for occasional imposition arises before the deadline for filing a return on the allocable share of top-up tax and others under Article 84 for the immediately preceding fiscal year (excluding where a return on the allocable share of top-up tax and others for the immediately preceding fiscal year is filed), the period from the date the immediately preceding fiscal year commences to the date a ground for occasional imposition arises shall be the period of occasional imposition. <Amended on Dec. 23, 2025> |
| (7) | Matters necessary for occasional imposition shall be prescribed by Presidential Decree. |
| (8) | Where the head of the tax office having jurisdiction over the place for tax payment or the commissioner of the competent regional tax office determines or rectifies an entity's allocable share of top-up tax and others under paragraphs (1) and (2), he or she shall notify the entity of the determination or rectification, as prescribed by Presidential Decree. <Amended on Dec. 23, 2025> |
| (9) | Where a local constituent entity fails to pay all or part of its allocable share of top-up tax and others, the head of the tax office having jurisdiction over the place for tax payment shall collect the unpaid allocable share of top-up tax and others pursuant to the National Tax Collection Act. <Amended on Dec. 23, 2025> |
[This Article Added on Dec. 31, 2022]
| Article 86 (Questioning and inspection) |
A public official who engages in business affairs regarding GloBE may question any of the following persons, inspect relevant books, documents, or objects, or issue an order to submit them, if necessary to perform his or her duties. In such cases, a public official shall not abuse his or her authority for purposes, etc. other than those necessary to perform his or her duties:
| 1. | A local constituent entity; |
| 2. | A person deemed to engage in a transaction with the local constituent entity prescribed in subparagraph 1. |
[This Article Added on Dec. 31, 2022]
CHAPTER VI PENALTY PROVISIONS
| Article 87 (Administrative Fines for noncompliance with obligation to submit data on international transactions) |
| (1) | Any of the following persons who fails to submit data by the deadline without any unavoidable cause prescribed by Presidential Decree or submits false data shall be subject to an administrative fine not exceeding 100 million won: <Amended on Dec. 31, 2022; Dec. 31, 2023> |
| 1. | A person obligated to submit a consolidated report on international transaction information under Article 16(1) or a statement of international transactions under paragraph (2)1 of that Article; |
| 2. | A person in receipt of a request to submit data under Article 16(4); |
| 3. | A local constituent entity obligated to file a GloBE information return under Article 83(1) or a local constituent entity obligated to file a return under Article 83(4); provided, where the local constituent entity has taken measures prescribed by Presidential Decree, such as disclosing the details of the calculation of GloBE income and loss for the fiscal year in the transition period, an administrative fine shall not be imposed on the violation of obligations related to the submission of the GloBE information return for the fiscal year in the transition period. |
| (2) | The tax authority may require a person on whom an administrative fine is imposed pursuant to paragraph (1) to submit data or correct false data within a specified period for compliance of 30 days; and where the person fails to submit data or to comply with the request for correction within such period, the authority may additionally impose an administrative fine not exceeding 200 million won in proportion to the period of delay. |
| (3) | An administrative fine under paragraphs (1) and (2) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. |
[Moved from Article 60 <Dec. 31, 2022>]
| Article 88 (Administrative fines for noncompliance with obligation to submit data on hybrid financial instrument transactions) |
| (1) | Where a domestic corporation obligated to submit data on hybrid financial instrument transactions under Article 25(3) fails to submit data or submits false data, it shall be subject to an administrative fine not exceeding 30 million won for each hybrid financial instrument. |
| (2) | An administrative fine under paragraph (1) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. |
[This Article Added on Dec. 31, 2022]
| Article 89 (Administrative fines for noncompliance with obligation to report financial information) |
| (1) | Any of the following persons who fails to provide the requested information without good reason or provides false information shall be subject to an administrative fine not exceeding 30 million won: <Amended on Dec. 31, 2023> |
| 1. | A person requested to provide information on the actual owner under Article 36(2); |
| 2. | Financial companies, etc. or financial transaction companies, etc. requested to provide financial information under Article 36(3) and (4) or financial information, etc. under Article 36(6). |
| (2) | An administrative fine under paragraph (1) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. |
[Moved from Article 61 <Dec. 31, 2022>]
| Article 90 (Administrative fines for noncompliance with obligation to report foreign financial accounts) |
| (1) | Where a person required to report his or her account under Article 53(1) fails to report his or her foreign financial account information by the reporting deadline or has under-reported the relevant amount, an administrative fine not exceeding 20 percent of the sum of the amount calculated as follows for each account subject to reporting shall be imposed: <Amended on Dec. 31, 2022> |
| 1. | Where the person fails to report the information: The amount not reported; |
| 2. | Where the person has under-reported the amount: The difference between the amount actually reported and the amount that should have been reported. |
| (2) | Where a person required to report his or her account fails to explain the source of the noncompliance amounts pursuant to Article 56(2) or gives a false explanation, the person shall be subject to an administrative fine equivalent to 20 percent of the amount that has not been explained or has been falsely explained; provided, no administrative fine shall be imposed where there exists any unavoidable cause prescribed by Presidential Decree, such as a natural disaster. |
| (3) | Administrative fines under paragraphs (1) and (2) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. |
| (4) | Where any person is punished pursuant to Article 16(1) of the Punishment of Tax Offenses Act or where any person is subject to a disposition of notification under Article 15(1) of the Procedure for the Punishment of Tax Offenses Act and complies with such notification, the person shall not be subject to an administrative fine under paragraph (1). |
[Moved from Article 62 <Dec. 31, 2022>]
| Article 91 (Administrative fines for noncompliance with obligation to submit data on overseas subsidiaries) |
| (1) | Where a resident or domestic corporation required to submit data, including the statement, etc. of an overseas direct investment, pursuant to Article 58(1) (requiring the submission of data under Article 58(1)1 through 4, only where a resident or domestic corporation that has made overseas direct investments under Article 3(1)18 of the Foreign Exchange Transactions Act directly or indirectly owns at least 10 percent of the total number of issued stocks or the total amount of investment of a corporation that has attracted such overseas direct investments) falls under any of the following cases, the resident or domestic corporation shall be subject to an administrative fine not exceeding 50 million won; provided, no administrative fine shall be imposed where there exists any unavoidable cause prescribed by Presidential Decree, such as where it is deemed impracticable for such resident or domestic corporation to submit data by the deadline under Article 58(1) or (6): <Amended on Dec. 21, 2021; Dec. 31, 2023> |
| 1. | Where the resident or domestic corporation fails to submit the statement, etc. of an overseas direct investment by the deadline under Article 58(1) or submits any false statement, etc. of an overseas direct investment; |
| 2. | Where a resident or domestic corporation in receipt of a request for submission or supplementation of data under Article 58(5) fails to submit such data by the deadline under Article 58(6) or submits any false data. |
| (2) | Where a resident or domestic corporation required to submit the statement of overseas real estate, etc. under Article 58(2) falls under any of the following cases, the resident or domestic corporation shall be subject to an administrative fine not exceeding 10 percent of the acquisition value, disposal value, and income from investment operations of the overseas real estate, etc. prescribed by Presidential Decree (the maximum amount of 100 million won); provided, no administrative fine shall be imposed where there exists any unavoidable cause prescribed by Presidential Decree, such as where it is deemed impracticable for such resident or domestic corporation to submit data by the deadline under Article 58(2) or (6): <Amended on Dec. 21, 2021; Dec. 31, 2023> |
| 1. | Where the resident or domestic corporation fails to submit the statement of overseas real estate, etc. by the deadline under the provisions, with the exception of the subparagraphs, of Article 58(2) or submits any false statement of overseas real estate, etc.; |
| 2. | Where a resident or domestic corporation in receipt of a request for submission or supplementation of data under Article 58(5) fails to submit such data by the deadline under Article 58(6) or submits any false data. |
| (3) | If a resident or domestic corporation fails to explain the source of the amount subject to explanation about the acquisition of fund or gives a false explanation in violation of Article 59(2) and (3), the resident or domestic corporation shall be subject to an administrative fine equivalent to 20 percent of the unexplained or falsely explained amount; provided, no administrative fine shall be imposed where there exists any natural disaster or any unavoidable cause prescribed by Presidential Decree. <Amended on Dec. 21, 2021> |
| (4) | Where a trustor who is obligated to submit the details of overseas trusts under Article 58(3) falls under any of the following subparagraphs, the trustor shall be imposed an administrative fine not exceeding 10 percent (up to 100 million won) of the value of overseas trust property under paragraph (8) of that Article; provided, where there exist unavoidable reasons prescribed by Presidential Decree, such as the case where it is deemed impossible or unnecessary to submit data by the deadline specified in Article 58(3) or (6), an administrative fine shall not be imposed: <Added on Dec. 31, 2023> |
| 1. | Where the trustor fails to submit the details of overseas trust by the deadline specified in Article 58(3) or submits any false details of overseas trust; |
| 2. | Where a resident or domestic corporation in receipt of a request for submission or supplementation of data under Article 58(5) fails to submit such data by the deadline under Article 58(6) or submits any false data. |
| (5) | Administrative fines under paragraphs (1) through (4) shall be imposed and collected by the tax authority, as prescribed by Presidential Decree. <Amended on Dec. 31, 2023> |
[Moved from Article 63 <Dec. 31, 2022>]
ADDENDA <Act No. 17651, Dec. 22, 2020>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2021; provided, the amended provisions of subparagraphs 1 and 2 of Article 52 (limited to virtual asset service providers, virtual assets, and virtual asset transactions) shall enter into force on January 1, 2022.
Article 2 (General applicability)
This Act shall begin to apply from the taxable year that commences after this Act enters into force.
Article 3 (Applicability to scope of special relationship)
| (1) | The amended provisions of Article 2(1)8d of the Adjustment of International Taxes Act (Act No. 6779) shall begin to apply to the first transaction made after January 1, 2003. |
| (2) | The amended provisions of Article 2(1)8c and d of the Adjustment of International Taxes Act (Act No. 7956) shall begin to apply to the first transaction made after May 24, 2006. |
Article 4 (Applicability to arm's length pricing methods)
The amended provisions of Article 5(1) of the Adjustment of International Taxes Act (Act No. 10410) shall apply from the first taxable year for which a tax return is filed after December 27, 2010.
Article 5 (Applicability to submission of consolidated reports on international transaction information)
| (1) | The amended provisions of the main clause, with the exception of the subparagraphs, of Article 16(2) (limited to the provisions regarding the deadline for submission of data) shall also apply where the obligation to submit the data under the subparagraphs of Article 16(2) for the taxable period or fiscal year commencing before this Act enters into force has arisen and the deadline for submission has not expired under the main clause of Article 11(1) of the previous Adjustment of International Taxes Act (referring to the Act before wholly amended by Act No. 17651; hereinafter referred to as "previous Act"). |
| (2) | The amended provisions of the main clause, with the exception of the subparagraphs, of Article 16(2) (limited to the provisions regarding a taxpayer required to submit a Master File and Local Files) shall also apply where the obligation to submit a Master File and Local Files has arisen before this Act enters into force and the deadline for submission of the statement of international transactions has not expired under the main clause of Article 11(1) of the previous Act. |
| (3) | The amended provisions of Articles 11(1), (2), and (6) and 12(1) of the Adjustment of International Taxes Act (Act No. 13553) shall begin to apply to the obligation to submit a consolidated report on international transaction information for the taxable year commencing on or after January 1, 2016. |
| (4) | The amended provisions of Article 11(1) and (2) of the Adjustment of International Taxes Act (Act No. 14384) shall begin to apply to a consolidated report on international transaction information submitted on or after January 1, 2017. |
Article 6 (Applicability to exclusion of interest overpaid compared to income from deductible expenses)
The amended provisions of Articles 15-2 and 16 (limited to the provisions regarding Article 15-2) of the Adjustment of International Taxes Act (Act No. 15221) shall begin to apply to the taxable year commencing on or after January 1, 2019.
Article 7 (Applicability to scope of application of accumulative taxation of retained earnings of specific foreign corporations)
The amended provisions of Articles 18(1) and 18-2 of the Adjustment of International Taxes Act (Act No. 11126) shall begin to apply to the fiscal year in which December 31, 2011 falls.
Article 8 (Applicability to exceptional spplication of specific foreign corporations’ retained earnings deemed dividends)
| (1) | The amended provisions of Article 18(1)1 of the Adjustment of International Taxes Act (Act No. 6779) shall apply from the first taxable year commencing after January 1, 2003. |
| (2) | The amended provisions of Article 18(1)1 of the Adjustment of International Taxes Act (Act No. 11606) shall apply from the taxable year in which January 1, 2013 falls. |
| (3) | The amended provisions of Article 18(5) of the Adjustment of International Taxes Act (Act No. 12164) shall apply from the taxable year commencing on or after January 1, 2015. |
Article 9 (Applicability to submission of data on specific foreign corporations)
The amended provisions of Article 20-2 of the Adjustment of International Taxes Act (Act No. 13553) shall begin to apply to the first submission of data for the taxable year immediately preceding the taxable year in which the filing deadline of a consolidated corporation falls on or after January 1, 2016.
Article 10 (Applicability to special cases regarding imposition of gift tax on overseas donation)
| (1) | The amended provisions of Article 21(1) of the Adjustment of International Taxes Act (Act No. 12849) shall begin to apply to the first donation made on or after January 1, 2015. |
| (2) | The amended provisions of Article 21(1) of the Adjustment of International Taxes Act (Act No. 14384) shall begin to apply to the donation of foreign property that a resident makes to a nonresident on or after January 1, 2017. |
Article 11 (Applicability to verification of personal information of counter-parties to financial transactions by financial companies)
The amended provisions of Article 31(4), (5), and (10) of the Adjustment of International Taxes Act (Act No. 13553) shall also apply to the counter-party to a financial transaction of a financial company, etc. as of January 1, 2016.
Article 12 (Applicability to conditions for commencing mutual agreement procedure)
The amended provisions of the proviso of Article 42(2)1 shall begin to apply to the request for commencing the mutual agreement procedure on or after the date this Act enters into force.
Article 13 (Applicability to end date of mutual agreement procedure)
| (1) | The amended provisions of the proviso, with the exception of the subparagraphs, of Article 46(3) shall also apply where the mutual agreement procedure is in progress as at the time this Act enters into force and a final judgment is rendered by a court on or after the date this Act enters into force. |
| (2) | The amended provisions of Article 23(4)2 of the Adjustment of International Taxes Act (Act No. 14384) shall also apply where the mutual agreement procedure is in progress as of January 1, 2017 and the applicant withdraws his or her application to commence the mutual agreement procedure on or after January 1, 2017. |
Article 14 (Applicability to enforcement of terms and conditions mutually agreed upon)
The amended provisions of Article 47(3) shall begin to apply to cases where an agreement is reached in writing between the Republic of Korea and the other Contracting State on or after the date this Act enters into force.
Article 15 (Applicability to scope of foreign financial accounts)
The amended provisions of subparagraphs 1 and 2 of Article 52 (limited to the provisions regarding virtual asset service providers, virtual assets, and virtual asset transactions) shall begin to apply to cases where the obligation to report foreign financial accounts arises on or after the enforcement date under the proviso of Article 1 of the Addenda.
Article 16 (Applicability to explanation about source of noncompliance amounts in relation to obligation to report foreign financial accounts)
The amended provisions of Article 56 (limited to the provisions regarding the tax authority) shall begin to apply to a request for an explanation made on or after the date this Act enters into force.
Article 17 (Applicability to obligation to submit data on overseas subsidiaries)
The amended provisions of Article 58(1) and (2) (limited to the provisions regarding the deadline for submission and the tax authority) shall also apply where the data under the subparagraphs of Article 58(1) is submitted for the taxable period or fiscal year that commences before this Act enters into force and the deadline for submission has not expired under the previous provisions [referring to Article 165-2(1) of the Income Tax Act (referring to the Act before partially amended by Act No. 17757) and Article 121-2(1) of the Corporate Tax Act (referring to the Act before partially amended by Act No. 17652)].
Article 18 (Applicability to explanation about source of funds for acquisition in cases of noncompliance with obligation to submit data on overseas subsidiaries)
The amended provisions of Article 59(1) and (3) (limited to the provisions regarding the tax authority) shall begin to apply to a request for an explanation made on or after the date this Act enters into force.
Article 19 (Applicability to sanctions for noncompliance with obligation to submit data)
The amended provisions of Article 12(2) and (3) of the Adjustment of International Taxes Act (Act No. 16843) shall begin to apply to a person on whom an administrative fine under Article 12(1) is imposed on or after January 1, 2020.
Article 20 (Applicability to administrative fines for noncompliance with obligation to report foreign financial accounts)
The amended provisions of Article 35(4) of the Adjustment of International Taxes Act (Act No. 16843) shall begin to apply to a disposition of notification taken pursuant to Article 15(1) of the Procedure for the Punishment of Tax Offenses Act on or after January 1, 2019.
Article 21 (General transitional measures)
Notwithstanding the amended provisions of this Act, the previous provisions shall apply to income tax and corporate tax imposed or to be imposed pursuant to the previous provisions as at the time this Act enters into force.
Article 22 (Transitional measures regarding application for advance pricing agreements and approval therefor)
Notwithstanding the amended provisions of Article 14(3), Article 6(3) of the previous Act shall apply to an application for an advance pricing agreement filed before this Act enters into force.
Article 23 (Transitional measures regarding submission of consolidated reports on international transaction information)
| (1) | Notwithstanding the amended provisions of the main clause, with the exception of the subparagraphs, of Article 16(2) (limited to the provisions regarding the deadline for submission of data), the main clause of Article 11(1) of the previous Act shall apply to the data for the taxable year or fiscal year that commences before this Act enters into force, for which the deadline for submission has already expired under the main clause of Article 11(1) of the previous Act as at the time this Act enters into force. |
| (2) | Notwithstanding the amended provisions of the main clause, with the exception of the subparagraphs, of Article 16(2) (limited to the provisions regarding taxpayers required to submit a Master File and Local Files), the proviso of Article 11(1) of the previous Act shall apply where the obligation to submit a Master File and Local Files has arisen before this Act enters into force and the deadline for submission of the statement of international transactions has already expired under the main clause of Article 11(1) of the previous Act as at the time this Act enters into force. |
Article 24 (Transitional measure regarding exclusion of interest paid on hybrid financial instrument transactions from deductible expenses)
Notwithstanding the amended provisions of Article 25(2), Article 15-3 of the previous Act shall apply to the interest paid before this Act enters into force.
Article 25 (Transitional measure regarding exceptional application of specific foreign corporations’ retained earnings deemed dividends)
Notwithstanding the amended provisions of Article 29(2)2, Article 17-3(2) of the previous Act shall apply to the fiscal year that commences before this Act enters into force.
Article 26 (Transitional measure regarding exemption from obligation to report foreign financial accounts)
| (1) | Notwithstanding the amended provisions of subparagraph 1 of Article 54, Article 34(5)1 of the previous Adjustment of International Taxes Act (referring to the Act before partially amended by Act No. 13553) shall apply where a report on a foreign financial account held before January 1, 2016 is filed after January 1, 2016. |
| (2) | Notwithstanding the amended provisions of subparagraph 1 of Article 54, Article 34(5)1 of the previous Adjustment of International Taxes Act (referring to the Act before partially amended by Act No. 16099) shall apply where a report on a foreign financial account held before January 1, 2019 is filed on or after January 1, 2019. |
Article 27 (Transitional measures regarding explanation about source of noncompliance amounts in relation to obligation to report foreign financial accounts)
Notwithstanding the amended provisions of Article 56(1), Article 34-3(1) of the previous Adjustment of International Taxes Act (referring to the Act before partially amended by Act No. 16099) shall apply where a report is filed on a foreign financial account held before January 1, 2019.
Article 28 (Transitional measures regarding obligation to submit data on overseas subsidiaries)
Notwithstanding the amended provisions of Article 58(1) and (2) (limited to the provisions regarding the deadline for submission and the tax authority), the previous provisions shall apply to the data for the taxable period or fiscal year that commences before this Act enters into force, for which the deadline for submission has already expired under the previous provisions [referring to Article 165-2(1) of the Income Tax Act (referring to the Act before partially amended by Act No. 17757) and Article 121-2(1) of the Corporate Tax Act (referring to the Act before partially amended by Act No. 17652); hereafter in this Article the same shall apply] as at the time this Act enters into force.
Article 29 (Transitional measures regarding penalty provisions)
In applying penalty provisions to violations committed before January 1, 2019, Articles 31-2, 31-3, and 34-2 of the previous Adjustment of International Taxes Act (referring to the Act before partially amended by Act No. 16099) shall apply.
Article 30 (Transitional measures regarding scope of application of previous Addenda)
The previous addenda provided by the amendments to the previous Adjustment of International Taxes Act shall remain effective even on or after the date this Act enters into force, except the addenda that became ineffective before this Act enters into force.
Article 31 Omitted.
Article 32 (Relationship to other statutes or regulations)
A citation of the previous Adjustment of International Taxes Act or any provision thereof by other statutes or regulations in force as at the time this Act enters into force shall be deemed a citation of the relevant provision of this Act, if any, in lieu of such previous provision.
ADDENDA <Act No. 18588, Dec. 21, 2021>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2022; provided, the amended provisions of Article 32(2) shall enter into force on January 1, 2025.
Article 2 (Applicability to reporting by arm's length price)
The amended provisions of subparagraph 4 of Article 6 shall also apply where reports on transactions conducted before this Act enters into force are filed after this Act enters into force.
Article 3 (Applicability to recalculation of arm’s length share of costs)
The amended provisions of the proviso of Article 9(2) shall also apply where the amount of the costs, etc. shared under an agreement concluded before this Act enters into force is recalculated after this Act enters into force.
Article 4 (Applicability to specific foreign corporations’ retained earnings deemed dividends)
The amended provisions of Article 27(1) and (3) shall begin to apply from the taxable year that commences after this Act enters into force.
Article 5 (Applicability to obligation to submit data on overseas real estate)
The amended provisions of Article 58(2)1 shall begin to apply where overseas real estate, etc. is acquired before this Act enters into force (limited to where the acquisition value of overseas real estate, etc. exceeds 200 million won as at the time of the acquisition thereof) and is owned as at the time this Act enters into force and where the deadline for submitting data arrives after this Act enters into force with regard to the taxable period or the fiscal year that commences before this Act enters into force.
Article 6 (Applicability to administrative fines for noncompliance with obligation to submit data on overseas real estate)
Provisions of Article 63(2) and (3) regarding administrative fines for violating Articles 58(2) and 59 (limited to data on the current status of holding overseas real estate, etc.) shall begin to apply where the obligation to submit data on the current status of holding overseas real estate, etc. is not fulfilled after January 1, 2023.
ADDENDA <Act No. 19191, Dec. 31, 2022>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2023; provided, the amended provisions of the following subparagraphs shall enter into force on the date specified in the relevant subparagraph. <Amended on December 31, 2023>
| 1. | Amendment to Chapter V (Articles 60 through 86 (excluding amendment to "share of top-up taxes allocated to domestic constituent entities under Article 73" in the amended provisions of Article 63, amendment to "Article 73(3) through (5)" in the amended provisions of Article 72(1), amendment to "Article 73" in the amended provisions of Article 77(1)2, amendment to "Article 73" in the amended provisions of Article 79(6)2, amendment to "share of top-up taxes allocated to domestic constituent entities under Article 73" in the amended provisions of Article 82 and the former part of Article 84(1)) and Article 87(1)3: January 1, 2024; |
| 2. | Amendment to "Amount of additional tax distribution to be distributed to domestically-constituted enterprises pursuant to Article 73" in the amended provisions of Article 63; Amendment to "Article 73(3) through (5)" in the amended provisions of Article 72(1), amendment to "Article 73" in the amended provisions of Article 77(1)2, amendment to "Article 73" in the amended provisions of Article 79(6)2, amendment to "Article 73" in the amended provisions of Article 79(6)2, amendment to "share of top-up taxes allocated to domestic constituent entities under Article 73" in the amended provisions of the former part of Article 84(1): January 1, 2025. |
Article 2 (Applicability to exemption from obligation to submit statements of international transactions)
The amended provisions of the proviso, with the exception of the subparagraphs, of Article 16(2) shall begin to apply to international transactions conducted in the taxable year that commences after this Act enters into force.
Article 3 (Applicability to exclusion of application of specific foreign corporations’ retained earnings deemed dividends)
The amended provisions of subparagraph 3 of Article 28 shall begin to apply to reports on the tax base or the tax amount filed after this Act enters into force.
Article 4 (Applicability to scope of passive income in exceptional application of specific foreign corporations’ retained earnings deemed dividends)
The amended provisions of Article 29(2)2 shall begin to apply to reports on the tax base or the tax amount filed after this Act enters into force.
Article 5 (Special cases concerning imposition of tax on foreign transparent entities)
The amended provisions of Article 34-2 shall begin to apply where applications for applying special cases concerning the imposition of tax on foreign transparent entities are filed or reports on the tax base on corporate tax or income tax are filed after this Act enters into force.
Article 6 (Applicability to GloBE taxation)
The amended provisions of Chapter V (Articles 60 through 86) shall begin to apply where any tax is imposed on the portion of the fiscal year that commences after the enforcement date specified in each subparagraph of Article 1 of these Addenda.
Article 7 (Applicability to administrative fines for noncompliance with obligation to submit data on hybrid financial instrument transactions)
The amended provisions of Article 88 shall begin to apply where interest, etc. are paid in the fiscal year that commences after this Act enters into force after hybrid financial instrument transactions are conducted.
ADDENDA <Act No. 19563, Jul. 18, 2023>
Article 1 (Enforcement date)
This Act shall enter into force one year after the date of its promulgation. (Proviso Omitted.)
Article 2 Omitted.
ADDENDA <Act No. 19928, Dec. 31, 2023>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2024; provided, the amended provisions of the following subparagraphs shall enter into force on January 1, 2025.
| 1. | The amended provisions of Articles 58(3) through (8), 59(1), and 91(1), (2), (4), and (5); |
| 2. | The amended provisions of Articles 72(1), 73(1), 73(4) through (7), and Article 82 of the Adjustment of International Taxes Act (Act No. 19191). |
Article 2 (Applicability to exemption from obligation to report foreign financial accounts)
The amended provisions of subparagraph 1c of Article 54 shall also apply to overseas financial accounts held in 2023.
Article 3 (Applicability to submission of details of overseas trust)
| (1) | The amended provisions of Article 58(3)1 shall begin to apply to the overseas trusts that are established before the end of the taxable period or fiscal year in which January 1, 2025 falls and commenced after January 1, 2025, which is maintained as of the beginning day of the taxable period or fiscal year, regarding which the details of overseas trusts for the taxable period or fiscal year in which the relevant beginning day falls are submitted. |
| (2) | The amended provisions of Article 58(3)2 shall begin to apply to the first overseas trusts established in the taxable period or fiscal year that commences after January 1, 2025. |
Article 3-2 (Applicability to submission of detailed statements of overseas direct investment and detailed statements of overseas real estate and requests for supplementation thereof)
The amended provisions of Article 58(5) shall also apply where the deadline referred to in the provisions, with the exception of the subparagraphs, of Article 58(1), or provisions, with the exception of the subparagraphs, of paragraph (2) of that Article, has arrived before this Act enters into force, and 2 years have not passed since the date following the relevant deadline as at the time this Act enters into force.
Article 4 (Applicability to imposition of GloBE tax)
| (1) | The amended provisions of Articles 61(1), 62(3) and (4), 64(1) and (3), 66(5), and 68(4), 69(2) through (7), 70(3) through (5), 72(8), 74(2), 75(1) through (3), and 76(4), 77(3) and (4), 79(1), (5) and (6), 80, 81(1), 83(4), 84(5) and 87(1) of the Adjustment of International Taxes Act (No. 19191) shall begin to apply to the taxation on the portions of the fiscal years commencing after January 1, 2024. |
| (2) | The amended provisions of Article 77-2 shall begin to apply to the cases where tax is imposed concerning the fiscal year that begins after January 1, 2024. |
| (3) | The amended provisions of Articles 72(1), 73(1), 73(4) through (7), and Article 82 of the Adjustment of International Taxes Act (Act No. 19191) shall begin to apply to cases where tax is imposed on the portion of the fiscal year commencing after January 1, 2025. |
Article 5 (Transitional measures concerning submission of data on international transactions)
Notwithstanding the amended provisions of the main clause, with the exception of the subparagraphs, of Article 16(2), the previous provisions shall apply to the scope of taxpayers obligated to submit a statement of international transactions, a condensed income statement, and a report on arm‘s length pricing for the taxable period or fiscal year that commences before this Act enters into force.
ADDENDA <Act No. 20612, Dec. 31, 2024>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2025; provided, the amended provisions of Articles 36(6) through (9), 37(1) and 38(1) 2 shall enter into force on January 1, 2026.
Article 2 (Applicability to requests for rectification based on arm's length price)
The amended provisions of Article 6 shall also apply where a request for rectification is filed after this Act enters into force with respect to any international transactions made before this Act enters into force.
Article 3 (Applicability to exclusion from recognition of offset transactions)
The amended provisions of Article 11(2) shall begin to apply to transactions subject to withholding tax after January 1, 2025.
Article 4 (Applicability to order of application of non-inclusion of paid interest in deductible expenses)
The amended provisions of Article 26(2) and (3) shall begin to apply to the business year that commences after January 1, 2025.
Article 5 (Applicability to exemption from obligation to report overseas financial accounts)
The amended provisions of subparagraph 1b of Article 54 and subparagraphs 6 and 7 of that Article shall begin apply to to the overseas financial accounts held in the taxable period or business year that commences after January 1, 2025.
Article 6 (Applicability to GloBE taxation)
The following amended provisions shall begin to apply to cases where a GloBE information return is filed under Article 83 or where the allocable share of top-up tax is returned under Article 84 after this Act enters into force:
| 1. | The amended provisions of Articles 61(1)2a, subparagraph 3b,c, and d of that paragraph, and subparagraphs 8 and 9 of that paragraph, and Articles 62(1) and 67(3) through (7); |
| 2. | The amended provisions of Article 73(5) and (6) of the Adjustment of International Taxes Act (Act No. 19928); |
| 3. | The amended provisions of Articles 74(2), 76(4), 77-2(1), (3), and (4), 79(1) and (6), 80(2) through (4), 83(1) and (4), and 84(1). |
ADDENDA <Act No. 21065, Oct. 1, 2025>
Article 1 (Enforcement date)
This Act shall enter into force on the date of its promulgation; provided, among the Acts amended pursuant to Article 7 of the Addenda, the amended parts of Acts that were promulgated before this Act enters into force but the enforcement dates of which have not yet arrived shall enter into force on the enforcement dates of the relevant Acts, respectively; and the following amended provisions shall enter into force on the dates specified in each subparagraph:
| 1. | The following amended provisions shall enter into force on January 2, 2026; provided, among the Acts amended pursuant to Article 7 of the Addenda (limited to the portions related to the amended provisions of items a and b), the amended provisions of the Acts that were promulgated before the enforcement date under the main clause but the enforcement dates of which have not yet arrived shall enter into force on the enforcement dates of the relevant Acts, respectively: |
| a. | The amended provisions of Article 19(4), 23, and 29(1)1, and Article 30; |
| b. | The amended provisions of Articles 12(2), 19(3), 22, and the proviso of Article 29(2) (limited to the provisions concerning the Minister of Finance and Economy and the Ministry of Finance and Economy); |
| c. | The Acts amended pursuant to Article 7 of the Addenda (limited to the portions related to the amended provisions of items a and b). |
Articles 2 through 6 Omitted.
Article 7 Omitted.
Article 8 Omitted.
ADDENDUM <Act No. 21215, Dec. 23, 2025>
Article 1 (Enforcement date)
This Act shall enter into force on January 1, 2026.
Article 2 (Applicability to documents for requests for rectification based on arm's length price)
The amended provisions of Article 6(2) shall also apply where a request for rectification is filed after this Act enters into force with respect to any international transactions made before this Act enters into force.
Article 3 (Applicability to calculation and imposition of domestic top-up tax)
The amended provisions of Article 61(1), Articles 63, 73-2 through 73-7, 74, 75, 77, 79, 80(1) (excluding the part concerning the transition fiscal year) and (4), Article 81, 84, and 85 shall begin to apply to cases where tax is imposed for the fiscal year commencing after the enforcement date of this Act.
Article 4 (Applicability to allocation of adjusted covered taxes)
The amended provisions of Article 67(1) shall begin to apply to cases where a GloBE information return is filed pursuant to Article 83 or where allocable share of top-up tax, etc. are reported pursuant to the amended provisions of Article 84 after this Act enters into force.
Article 5 Omitted.